Asian markets mostly up, eyes on crunch EU summit
Oil prices are sitting at six-month highs thanks to growing unrest in Libya, output cuts by OPEC and Russa, and hopes for the China-US trade talks (DAVID MCNEW)
Hong Kong (AFP) – Asian markets mostly rose Tuesday as dealers await the latest developments in the China-US trade talks, while investors look ahead to a key European Union summit that will decide Britain’s immediate future in the bloc.
While the broad trend remains upwards, sentiment was given a knock by news that US President Donald Trump had trained his sights on the EU by threatening tariffs on billions of dollars’ worth of goods.
Earnings season also kicks off in earnest this week, with expectations low but observers hoping for some positive forward guidance.
Beijing and Washington have flagged progress in trade negotiations, helping global markets push to multi-month highs this year, though there have been few details.
“Global growth concerns are easing as US-China appear to be close to a deal, but without details and with veiled threats if the deal is not (the) best, markets are treading carefully,” said OANDA analyst Alfonso Esparza.
Hong Kong was ended up 0.3 percent, while Tokyo finished 0.2 percent higher.
Seoul added 0.1 percent, while Sydney was marginally higher with Taipei, Bangkok and Jakarta also up.
However, Shanghai and Wellington each ended down 0.2 percent, while Mumbai was off 0.1 percent.
In early European trade London and Frankfurt each dipped 0.2 percent, while Paris slipped 0.1 percent.
Trading was hit by news that the US had threatened levies on up to $11.2 billion of a host of European products in response to subsidies received by aircraft maker Airbus as part of a long-running row.
The move comes as Brussels and Washington are on the verge of a stand-off over the auto sector, while Trump has also warned of action against Japan as part of a multi-pronged trade fight that has shaken investor confidence.
“Whilst at present it looks like a relatively contained problem relating to the ruling on Airbus subsidies, there is a risk of contagion if the EU decides to respond in kind,” said Neil Wilson, chief market analyst at Markets.com.
“Moreover, it will not do anything to improve business sentiment in the eurozone, and we must assume that the (European Central Bank) will take a rather dim view of the situation with regards the growth outlook.”
– May’s big week –
On currency markets the pound was standing its ground despite Brexit uncertainty, with Prime Minister Theresa May holding a series of meetings with EU leaders to win backing for a second delay to Britain’s exit from the bloc.
The British premier has appealed for the divorce date to be put back to June 30 and will learn Brussels’ decision at a showdown summit Wednesday.
If the request is denied Britain will crash out on Friday, with analysts warning of an economic catastrophe for the country if that happens.
However, even if she gets the extension, May is still struggling to get backing in Britain’s parliament for the exit deal she agreed with the EU months ago.
Adding to market concern is the fact she is also facing a revolt by pro-Brexiters within her Conservative Party over her decision to hold talks with the opposition Labour Party.
Oil prices were barely moved after a recent surge fuelled by increasing unrest in key producer Libya where there is fear of a civil war as it is engulfed in violent power struggles between an array of armed groups following the 2011 overthrow of dictator Moamer Kadhafi.
Both main contracts are around six-month highs, boosted by hopes for the China-US talks, an output cut by OPEC and non-members including Russia, and sanctions on Venezuela and Iran.
“It’s very bullish markets when traders not only ignored last week’s unexpected US inventory builds but completely sidestepped Friday’s Baker Hughes surging rig count,” said Stephen Innes at SPI Asset Management.
“Usually, this bearish combination would have thwarted the ongoing rally.”
Dealers are keeping tabs on a key ECB meeting, while minutes from the Federal Reserve’s March policy gathering are also due to be released, giving an insight into its outlook for the US economy.
– Key figures around 0810 GMT –
Tokyo – Nikkei 225: UP 0.2 percent at 21,802.59 (close)
Hong Kong – Hang Seng: UP 0.3 percent at 30,157.49 (close)
Shanghai – Composite: DOWN 0.2 percent at 3,239.66 (close)
London – FTSE 100: DOWN 0.2 percent at 7,440.50
Pound/dollar: UP at $1.3075 from $1.3065 at 2040 GMT
Euro/pound: DOWN at 86.15 pence from 86.19 pence
Euro/dollar: UP at $1.1266 from $1.1261
Dollar/yen: DOWN at 111.24 yen from 111.49 yen
Oil – West Texas Intermediate: UP 10 cents at $64.50 per barrel
Oil – Brent Crude: UP two cents at $71.12 per barrel
New York – Dow: DOWN 0.3 percent at 26,341.02 (close)
Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.