Asian markets rally as Trump says trade talks ‘going very well’

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HONG KONG, Oct 11, 2019 (BSS/AFP) – Asian markets rallied Friday on signs
of progress in the China-US trade talks, with Donald Trump saying they were
“going very well”, while the pound held gains after the leaders of Britain
and Ireland indicated a potential breakthrough in Brexit talks.

After a nervous week on trading floors, negotiators from the world’s top
two economies kicked off long-awaited negotiations on resolving their long-
running tariffs row on a positive footing, easing worries that they might be
cut short.
Without elaborating, Trump told reporters: “I will say I think it’s going
really well. We had a very, very good negotiation with China.”

Adding to the positive vibes was news that Trump would meet China’s top
trade envoy Liu He at the White House.

The developments allowed dealers to breathe a sigh of relief as tensions
between the two sides appeared to be growing after the US put new
restrictions on Chinese firms over human rights abuses and reports Beijing
had narrowed the issues it was willing to discuss.

“The fog of trade war is beginning to lift, giving way to an air of trade
optimism sweeping through global capital markets,” said Stephen Innes, Asia-
Pacific market strategist at AxiTrader.

“Investors are starting to believe there is light at the end of the…
tunnel as hope springs eternal.”

Hong Kong led gains across Asia, jumping more than one percent, Tokyo
heading into the break one percent higher and Shanghai adding 0.1 percent.

Talks are expected to resume on Friday, with hopes they can at least lead
to a delay in tariffs due next week being imposed on China.

– Brexit optimism –

“The prospect of US-China trade truce that results in the suspension of
further planned tariffs increases is rightly welcome news,” Rodrigo Catril at
National Australia Bank said.

“But as it is often the case, the devil will be in the detail,” he warned,
adding that if the optimism is to last “a meaningful de-escalation in
tensions is required”.

And Thanos Vamvakidis, at Bank of America Merrill Lynch, told Bloomberg TV
“we are not out of the woods yet”.

Markets are also getting some support from rare signs of progress in the
Brexit saga after British Prime Minister Boris Johnson and his Irish
counterpart Leo Varadkar said they could see a route towards striking a
possible divorce deal.

After hours of talks regarding the vexed question of Northern Ireland, the
two issued a joint statement that said: “Both continue to believe a deal is
in everybody’s interest. They agreed that they could see a pathway to a
possible deal.”

While Varadkar said there were still hurdles to overcome, the news did
provide some much-needed hope in the crisis after German Chancellor Angela
Merkel was reported to have said Brexit talks were “close to breaking down”.

The pound surged two percent against the dollar on Thursday and also
rallied on the euro, and in early Asian trade managed to hold its ground.

“The positive vibe has raised some hope for a chance of a Brexit deal
ahead of the EU summit at the end of next week,” NAB’s Catril added.

Hopes for the China-US talks helped oil prices higher, with traders also
cheered by OPEC Secretary-General Mohammad Barkindo saying the grouping of
the world’s giant producers would do what it could to avert another slump.

Both main contracts rose Friday, having put on more than one percent the
day before.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 1.0 percent at 21,761.25 (break)

Hong Kong – Hang Seng: UP 1.4 percent at 26,066.70

Shanghai – Composite: UP 0.1 percent at 2,950.37

Pound/dollar: DOWN at $1.2439 from $1.2440 at 2100 GMT

Euro/pound: DOWN at 88.52 pence from 89.56 pence

Euro/dollar: UP at $1.1010 from $1.1006 at 2100 GMT

Dollar/yen: UP at 108.06 yen from 107.88 yen

West Texas Intermediate: UP 24 cents at $53.79 per barrel

Brent North Sea crude: UP 31 cents at $59.41 per barrel

New York – Dow: UP 0.6 percent at 26,496.67 (close)

London – FTSE 100: UP 0.3 percent at 7,186.36 (close)