Asian stocks lifted by hopes of a trade deal but caution persists

Asian stocks lifted by hopes of a trade deal but caution persists
Written by:
Andia Rispah
15th November 2019
  • Asian stocks rose following White House comments suggesting the possibility of a U.S.-China trade deal revived hopes that the tariff war may be coming to an end.
  • The U.S. -China trade deal caution persists
  • Increasing global economic uncertainties kept clients away from spending
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On Friday, Asian stocks rose following White House comments, which suggested the possibility of a trade deal between the U.S. and China. The comments revived hopes that the tariff war may be coming to an end.

However, investor sentiments remained fragile after China’s weak data reinforced concerns about the global economy. Increasing caution about false signs trade deal progress also increased.

The buoyant mood seemed to extend to Europe, where pan-region Euro Stoxx 50 futures rose 0.57% to 3,705. german futures rose 0.53% to 13,253.5, and FTSE futures moved up 0.36% to 7,322.

The U.S. S&P 500 e-mini stocks also added 0.35% to 3,107.8, following the S&P 500 index closing at a record high on Thursday.

Boosting investor confidence in the early Asian trade, Larry Kudlow- White House advisor said the U.S. was getting closer to a trade agreement with China.

The boost of confidence helped lift the MSCI’s broadest index of Asia-Pacific shares to gain 0.57%. Japan’s Nikkei gained 0.7%, and Australian shares also gained 0.87%.

However, the Chinese blue-chip shares struggled to hold gains after rising as much as 0.23% earlier in the day. The CSI 300 Index was last down 0.45%.

The Hang Seng index added 0.15% but was on its weekly worst performance in nearly four months. The anti-government protesters paralyzed part of the financial hub for the fifth day on Friday.

The U.S. -China trade deal caution persists

Shane Oliver, who is the chief economist at AMP Capital in Sydney, likened the regional markets’ bullish reaction to the positive trade news to being in a relationship with an alcoholic, hoping for recovery.

“Markets want to believe that there will be some resolution to this issue, some sort of lasting truce at least, even though the experience of the last 18 months doesn’t give a lot of cause for comfort,” he said.

Oliver said, weaker U.S. and Chinese economies, and the U.S. presidential election next year put pressure on both sides to agree.

The yen, which is a safe-haven weakened, with the dollar rising 0.17% to buy 108.57 yen. The euro remained unchanged at $1.1023, and the dollar index was off just 0.02% at 98.143.

China has ended a nearly five-year ban on imports fo the U.S. poultry meat. The U.S. Trade Representative said it would lead to more than $1 billion in annual exports to China.

The development followed last week’s comments from officials from both countries that they had a deal to roll back tariffs. But, Trump denied any such agreement.

The new record for the S&P gained just 0.08% to 3,096.63 came despite the grim outlook from the network gear maker Cisco Systems that underlined the impact of trade uncertainty.

Cisco’s forecast second-quarter revenue and profit were below expectations as the increasing global economic uncertainties kept clients away from spending more on the Reuters and switches, sending its shares down 7.3%.

In contrast, the S&P 500 and the DJIA fell 0.01% 27,781.96. The Nasdaq Composite also dropped 0.04% to 8,479.02.

Capping broader confidence was German data showing economic growth to be just 0.1% in the third quarter. Consumer spending helped Germany to avoid a mild contraction.

Numbers from China indicated a faster-than-expected slowdown in factory output growth in October because of the weak domestic and global demand.

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