Asian markets rise but investors guarded over trade

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HONG KONG, Aug 29, 2018 (BSS/AFP) – Asian markets enjoyed broad gains for
a third day on Wednesday but investors moved more cautiously as they took
stock of the latest trade developments and looked to possible headwinds.

New York provided another record lead on lingering optimism after the
United States and Mexico agreed on a revised free-trade deal and Canada began
talks that could see them join.

However, while the news was seen as a much-needed boost after Donald Trump
threatened to tear up the North American Free Trade Agreement when he took
office, there remain concerns about his ongoing tariffs row with China that
has rattled markets for months.

Washington could soon also impose levies on $200 billion of Chinese goods,
which would come on top of the $50 billion already being hit.

“Latest news headlines seem to be easing market worries over a trade war
for now,” Kengo Suzuki and other forex strategists at Mizuho Securities said
in a note.

“But it may be a bit too early to become fully optimistic, given fears
that the Trump administration may impose additional tariffs on $200 billion
worth of Chinese goods as early as next month and US-China summit talks are
expected after the US mid-term elections in November,” they said.

Still, for now traders are upbeat. Tokyo went into the break 0.7 percent
higher and Hong Kong added 0.3 percent.

Sydney rose 0.3 percent while Singapore and Seoul each edged up 0.1
percent. Wellington and Taipei also rose but Shanghai lost 0.4 percent.

– Peso sinks –

“Overall the US-Mexico deal has deflected attention away from Trump’s
legal setbacks as investors may see the light at the end of the tunnel —
hoping that the US-Sino trade dispute can end in an equally friendly manner,”
Stephen Innes, who heads Asia-Pacific trade at OANDA, said in a note.

On currency markets the Mexican peso gave up all the gains made on the
back of the trade deal news and was down 1.7 percent Wednesday as observers
questioned the agreement.

Its “underperformance can be attributed to numerous reports suggesting the
preliminary trade agreement… is far from complete and it still needs US
Congress approval”, said Rodrigo Catril, senior foreign exchange strategist
at National Australia Bank.

“In a nutshell it seems that many contentious issues remain unresolved and
there is a very tight timeline that needs to followed if a NAFTA deal is to
be ratified by the current US Congress.”

The pound was also struggling to recover after British Prime Minister
Theresa May seemed to hint she was open to a possible no-deal Brexit, saying
leaving the EU without an agreement would not be a disaster.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.7 percent at 22,968.18 (break)

Hong Kong – Hang Seng: Up 0.3 at 28,444.08

Shanghai – Composite: DOWN 0.4 percent at 2,767.70

Euro/dollar: DOWN at $1.1686 from $1.1698 at 2100 GMT

Pound/dollar: DOWN at $1.2860 from $1.2896

Dollar/yen: UP at 111.25 yen from 111.07 yen

Oil – West Texas Intermediate: DOWN one cent at $68.52 per barrel

Oil – Brent Crude: DOWN six cents at $75.89

New York – Dow Jones: UP 0.1 percent at 26,064.02 (close)

London – FTSE 100: UP 0.5 percent at 7,617.22 (close)

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