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Asian markets struggle for traction, dealers await trade details
HONG KONG, Dec 16, 2019 (BSS/AFP) – Asian investors gave a cool welcome
Monday to the much-hyped China-US trade agreement, with observers saying they
were still waiting for details, while the pound held gains after last week’s
general election win for Prime Minister Boris Johnson.
The world’s two economic superpowers on Friday said they had finally
reached a partial deal that will cool down their long-running tariffs row,
cancelling the imposition of fresh measures and winding back some others.
Anticipation that a pact was near helped fire global markets towards the
end of last week, but selling began soon after the announcement was made with
Wall Street finishing flat.
Under the agreement Donald Trump agreed to cancel tariffs due on Sunday and
lower levies already in place, while China committed to purchases of US
manufactured merchandise, energy goods and farm exports, with the text due to
be signed early next month.
US Trade Representative Robert Lighthizer hailed Trump’s “remarkable”
achievement but Asian markets, which enjoyed huge gains Friday, struggled to
gain traction at the start of the week as investors await specifics on the
pact.
“There is a lot to be seen in the weeks and months ahead whether we are
going to be able to actually deliver on the phase one deal that we just went
through,” Ephie Coumanakos, Concord Financial Group managing partner, told
Bloomberg TV. “We don’t know all of the specifics.”
Tokyo ended the morning barely moved, while Shanghai and Hong Kong each
dipped 0.1 percent with dealers unmoved by forecast-beating economic data out
of China.
– ‘End of the beginning’ –
Seoul was flat, Singapore edged 0.1 percent higher and Taipei put on 0.2
percent but Manila was slightly lower, though Sydney rose more than one
percent.
“Yes, we have a deal, but trade negotiations will continue,” said Stephen
Innes at AxiTrader. “For now, escalation seems to be off the table. However,
the path to the comprehensive agreement is still miles away.
“Ultimately, the phase one deal fell short of market expectations and is
probably not enough to fully restore business confidence or generate a
meaningful recovery in exports or investment.”
Sterling held up but was down slightly from Friday’s 18-month highs against
the dollar and more than three-year peak on the euro after Johnson’s crushing
election win on Thursday that will allow him to push through his Brexit
agreement.
The removal of uncertainty surrounding Brexit allowed markets to breathe a
huge sigh of relief, though analysts said the saga still has some way to run.
Quentin Fitzsimmons, at T. Rowe Price, said: “This is just the end of the
beginning. The real work of negotiating the UK’s future trading relationship
with the EU lies ahead and that has the potential to become very
complicated.”
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: FLAT at 24,018.52 (break)
Hong Kong – Hang Seng: DOWN 0.1 percent at 27,658.67
Shanghai – Composite: DOWN 0.1 percent at 2,965.65
Pound/dollar: UP at $1.3361 from $1.3336 at 2130 GMT on Friday
Euro/pound: DOWN at 83.29 pence from 83.37 pence
Euro/dollar: UP at $1.1128 from $1.1117
Dollar/yen: UP at 109.37 yen from 109.35 yen
West Texas Intermediate: DOWN 24 cents at $59.83 per barrel
Brent North Sea crude: DOWN 24 cents at $64.98 per barrel
New York – Dow: FLAT at 28,135.38 (close)
London – FTSE 100: UP 1.1 percent at 7,353.44 (close)
BSS/AFP/RY/09:55 hrs