ANALYSIS: Asia markets rally as Trump delays China tariffs

Date created : 25/02/2019 - 10:51  GMT/ZULU

Markets have rallied after Donald Trump hailed progress in the China-US trade talks and delayed a March 1 deadline for ramping up tariffs on imports AFP

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Hong Kong

by Xian Wang and Biodun Iginla, France24 Financial Analysts

Shanghai led a rally across Asian markets Monday after Donald Trump said he would delay a hike in tariffs on Chinese goods citing "substantial progress" in trade talks and fuelling hopes of an end to their long-running stand-off.

Optimism over the negotiations had already provided support to global equities, spurring a rally in January and February, but the president's comments gave extra ammunition to investors to ramp up the buying.

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The news also fired currency markets with the yuan extending gains to a seven-month high, while other high-yielding, riskier units were also up against the dollar.

Trump said on Twitter that the US "has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues".

He added: "As a result of these very productive talks, I will be delaying the US increase in tariffs now scheduled for March 1."

The president also said he planned to hold a summit with his Chinese counterpart Xi Jinping at his Mar-a-Lago estate in Florida to sign a deal.

China's Xinhua news agency added that the two sides had "made substantial progress on specific issues" including on transfer of technology, intellectual property and agriculture.

- 'Sigh of relief' -

In morning trade, Shanghai jumped 2.8 percent and Hong Kong added 0.4 percent while Tokyo ended the morning 0.7 percent higher.

Sydney and Singapore each put on 0.1 percent, while Seoul was flat, Taipei added 0.4 percent and Jakarta rose 0.3 percent.

The gains in Asia followed another positive lead from Wall Street, where the Dow enjoyed its ninth straight weekly gain -- the longest streak since May 1995.

"This is a sigh of relief," said Ben Emons, managing director for global macro strategy at Medley Global Advisors. "Markets will still keep a level of caution, but this news is encouraging," he told Bloomberg TV.

The upbeat sentiment lifted high-risk currencies, with the yuan hitting its highest level against the dollar since July, while South Korea's won, the Australian dollar and the Indonesia rupiah were also well up.

Forex traders will be closely watching speeches this week from top Federal Reserve officials -- including chairman Jerome Powell's appearance in front of lawmakers -- hoping for clues about the bank's monetary policy plans.

Wall Street "will be looking for soothing comments about the future size of the balance sheet -- the bigger the better -- and insights into future rate hikes", said Jeffrey Halley, senior market analyst at OANDA.

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: UP 0.7 percent at 21,572.11 (break)

Hong Kong - Hang Seng: UP 0.4 percent at 28,926.21

Shanghai - Composite: UP 2.8 percent at 2,882.51

Euro/dollar: UP at $1.1347 from $1.1332 at 2130 GMT

Pound/dollar: UP at $1.3067 from $1.3053

Dollar/yen: DOWN at 110.73 yen from 110.75

Oil - West Texas Intermediate: UP 15 cents at $57.41

Oil - Brent Crude: UP 19 cents at $67.31 per barrel

New York - Dow: UP 0.7 percent at 26,031.81 (close)

London - FTSE 100: UP 0.2 percent at 7,178.60 (close)

Asian markets resume sell-off on lingering China fears

11 January 2016 - 04H25

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© AFP/File | Analysts say market is concerned about China?s financial stability and its slowing economic outlook

HONG KONG  - 

by Xian Wan and Biodun Iginla, France24 financial news analysts, Hong Kong

         

Asian shares tumbled again Monday as another round of tepid data added to concerns about China's economy, which is already responsible for sparking a rout across global markets at the start of the year.

After enjoying some minor relief on Friday, the region's trading floors were once again swathed in red as panicking investors dumped equities while oil prices also headed south, sitting around 12-year lows.

The gains at the end of last week were not enough to help US and European markets, which ended deep in negative territory as a strong US jobs report was overshadowed by fears about China and its leaders' ability to manage a slowdown.

"The market is concerned about China?s financial stability," Matthew Sherwood, head of investment strategy at asset managers Perpetual in Sydney, told Bloomberg News.

"People are also quite nervous about the Chinese economic outlook. China is certainly slowing on a very gradual path down. A lot of people are fearing a hard landing is in play."

On Saturday official figures showed Chinese consumer prices picked up slightly in December but inflation remained about half the government's target. Prices paid at the factory gate, a guide to future inflation, also sank for a 46th consecutive month.

The figures are the latest highlighting the weakness in China, which is expected to have grown in 2015 at its slowest rate in a quarter of a century.

In early trade Monday Shanghai slumped two percent at one point before paring the losses to sit 1.2 percent lower, while Hong Kong gave up 2.3 percent, Sydney shed 1.9 percent, Seoul slipped 0.9 percent and Singapore was 2.0 percent off. Tokyo was closed for a public holiday.

- 'Kneecapping' -

Investors extended losses from last week, which was one of the worst starts to a year on record with dealers rattled after trade was suspended twice in four days in Chinese markets. Shanghai ended the week about 10 percent lower, in echoes of a sell-off that fuelled global turmoil in the summer.

London lost 5.3 percent over the week, Paris shed 6.5 percent and Frankfurt dropped 8.3 percent.

And on Wall Street, the Dow and S&P 500 lost about 6.0 percent, marking the worst opening week of a year in the history of either index.

Beijing's bungling of the handling of the crisis added to the nervousness.

"Chinese equities have had a tough start to the year. This has flowed around the globe, kneecapping equities, where valuations were already deemed to be stretched," Mark Smith, a senior economist in Auckland at ANZ Bank New Zealand, said.

"A weaker inflation outlook and heightened market volatility has also swung the pendulum back to more policy support."

Oil prices continued their slump, with both main global contract dropping around two percent on Monday, with the crisis in China -- the world's biggest energy user -- adding to a worldwide glut, weak demand and a strong dollar.

Worries about the global outlook also pushed up the price of gold, which is considered a safe investment in times of uncertainty. The precious metal, which is up more than three percent so far this year, bought $1,105 an ounce Monday.

- Key figures around 0230 GMT -

Shanghai - Composite: DOWN 1.2 percent at 3,149.33

Hong Kong - Hang Seng: DOWN 2.3 percent at 19982.98

Tokyo - Nikkei 225: Closed for a public holiday

Euro/dollar: UP at $1.0938 from $1.0922 late Thursday

Dollar/yen: DOWN at 117.17 yen from 117.26 yen

New York - Dow: DOWN 1.0 percent at 16,346.45 (close)

London - FTSE 100: DOWN 0.7 percent at 5,912.44 (close)