Daily Times

Most Asian markets rose again on Friday following a record close on Wall Street as trade war fears are tempered by hopes China and the US will eventually reach a compromise, while attention turns to the start of earnings season.

Equities have had a rollercoaster week, with strong US jobs figures providing initial support before Donald Trump’s threatened tariffs on another $200 billion of Chinese imports sent investors running for the hills on Wednesday.

However, Beijing’s measured response to the warning and indications from both sides that they are willing to talk has instilled trading floors with a little optimism heading into the weekend.

US Treasury Secretary Steven Mnuchin on Thursday told lawmakers the White House was “available” for discussions with China.

That came after China’s Vice Minister of Commerce Wang Shouwen said the economic superpowers “should sit down and try to find a solution to this trade problem”.

News that China’s trade surplus with the US, a major cause of Trump’s anger, hit a record in June added to the tensions.

Expectations that US companies will report a surge in April-June earnings have also helped deflect attention from the possibility of a damaging trade war.

All three main indexes ended higher in New York with the Nasdaq hitting a fresh record thanks to a rally in the tech sector.

And those gains filtered through to Asia, with the Nikkei in Tokyo ending 1.9 percent higher thanks to a weaker yen, while Hong Kong added 0.2 percent. Seoul and Taipei each gained more than one percent, while Singapore added 0.2 percent. Manila, Bangkok and Jakarta were also well up.

Trump rattles pound

However, Shanghai dipped 0.2 percent after jumping more than two percent Thursday, while investors were unmoved by figures showing Chinese exports beat expectations last month but imports fell short.

Sydney was barely moved.

Hannah Anderson, global market strategist at JP Morgan Asset Management, said: “Our baseline view is that trade policy uncertainty will continue driving higher levels of volatility but will not fundamentally alter the direction of markets over the next 12-18 months.

“Moderate, negotiated solutions remain our base case outcomes for NAFTA and China trade disputes. There is a rising risk, however, that if these disputes drag on or intensify, market reactions could become deeper and more persistent.”

On currency markets the upbeat mood has helped high-yielding currencies higher against the dollar, with the Chinese yuan — which has taken a hit in recent weeks on trade war fears — benefitting from words of support from state media.

The dollar is sitting at six-month highs against the yen, which is considered a safe bet in times of turmoil, while the US unit is holding recent gains against the pound.

Sterling has been hammered this week by fresh concerns about Prime Minister Theresa May’s political future after her pro-Brexit foreign minister resigned over her plans for leaving the EU.

The selling picked up Thursday when Trump, on a visit to Britain, criticised her handling of Brexit and warned that a US trade deal would be dead if the country did not fully leave the bloc.

In early European trade London rose 0.6 percent, while Frankfurt and Paris each gained 0.5 percent.

Key figures

Tokyo – Nikkei 225:UP 1.9 percent at 22,597.35 (close)

Hong Kong – Hang Seng: UP 0.2 percent at 28,525.44 (close)

Shanghai – Composite: DOWN 0.2 percent at 2,831.18 (close)

London – FTSE 100: UP 0.6 percent at 7,693.20

Dollar/yen: UP at 112.62 yen from 112.53 yen at 2100 GMT

Euro/dollar: DOWN at $1.1654 from $1.1671

Pound/dollar: DOWN at $1.3162 from $1.3207

Oil – West Texas Intermediate: DOWN seven cents at $70.26 per barrel

Oil – Brent Crude: DOWN 28 cents at $74.17 per barrel

New York – Dow: UP 0.9 percent at 24,924.89 (close).

Published in Daily Times, July 14^th 2018.