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Asian markets ride positive wave on hopes of trade resolution
HONG KONG, Sept 19, 2018 (BSS/AFP) – Asian markets rose Wednesday as new
tit-for-tat tariffs by China and the United States were seen as lighter than
feared, while there are hopes the two sides will eventually avert a damaging
trade war.
Donald Trump on Monday said he would press ahead with 10 percent levies on
another $200 billion of imports, prompting Beijing to target $60 billion of
US goods with five to 10 percent taxes.
The developments were a clear escalation in the months-long standoff
between the world’s top two economies. But analysts said dealers had been
expecting the measures and essentially took the lower rates as a positive
sign.
Wall Street’s three main indexes rallied and Asia picked up the baton.
Tokyo rose 1.1 percent, with a shift out of the safe-haven yen supporting
Japanese exporters, while Hong Kong finished up 1.2 percent and Shanghai
ended 1.1 percent higher.
Sydney rose 0.5 percent, Singapore was up one percent and Taipei increased
0.9 percent. Wellington, Bangkok and Jakarta also posted strong gains but
Seoul was flat.
“The bottom line why the market didn’t react negatively was the lack of
shock and awe given the tariffs were so well telegraphed,” said Stephen
Innes, head of Asia-Pacific trade at OANDA.
Dealers are now eyeing possible talks between Washington and Beijing after
US Treasury Secretary Steven Mnuchin sent an invite to avert a trade war,
which many fear could destabilise the world economy.
“It’s more likely that there will be some negotiated resolution coming
through in the near term,” George Schultze, founder and CEO of Schultze Asset
Management in New York, told Bloomberg TV.
“Cooler heads will eventually prevail, because otherwise both sides are
shooting themselves in the foot.”
– Upheaval warning –
Chinese Premier Li Keqiang on Wednesday hit out at “unilateralism” during
a speech at the summer session of the World Economic Forum.
He told delegates problems must be worked out through consultations,
adding: “It is essential that we uphold the basic principles of
multilateralism and free trade.”
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Li also denied accusations China was allowing its yuan currency to weaken
to offset the effects of Trump’s tariffs, saying “there is no evidence”.
Despite the calm on markets, Innes warned of the likelihood of further
upheaval.
“Despite the market taking the bluster in stride, history tells us that
tariffs are detrimental for global trade and commerce,” he said. “As such the
current levels of market buoyancy belie the possible groundswell that could
overrun markets.”
On oil markets, both main contracts continued to rise after rallying more
than one percent Tuesday on the back of comments from OPEC kingpin Saudi
Arabia that it is happy with prices rising above $80 a barrel.
On foreign exchanges, the broadly upbeat sentiment provided support to
embattled high-yielding and emerging market currencies, with Indonesia’s
rupiah up 0.1 percent, the Australian dollar 0.5 percent higher and the Thai
baht 0.1 percent up.
The Mexican peso was 0.4 percent up, Russia’s ruble jumped 0.9 percent and
the South African rand rallied 0.7 percent.
In early European trade London rose 0.4 percent, while Paris and Frankfurt
were 0.2 percent higher.
– Key figures around 0810 GMT –
Tokyo – Nikkei 225: UP 1.1 percent at 23,672.52 (close)
Hong Kong – Hang Seng: UP 1.2 percent at 27,407.37 (close)
Shanghai – Composite: UP 1.1 percent at 2,730.85 (close)
London – FTSE 100: UP 0.4 percent at 7,330.85
Euro/dollar: UP at $1.1704 from $1.1680 at 2100 GMT
Pound/dollar: UP at $1.3173 from $1.3146
Dollar/yen: UP at 112.33 yen from 112.33 yen
Oil – West Texas Intermediate: UP 31 cents at $70.16 per barrel
Oil – Brent Crude: UP 26 cent at $79.29 per barrel
New York – Dow Jones: UP 0.7 percent at 26,246.96 (close)
BSS/AFP/HR/1428