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Asian markets swing up on positive day for pro-trade camp

Concerns about a possible global trade war abated after the White House said there could be 'potential carve-outs for Mexico and Canada' and other countries
AFP

Hong Kong (AFP) – A softer tone on threatened tariffs from the White House helped Asian markets rise on Thursday, continuing a week of volatility sparked by fears of a global trade war.

Equities have swooned since Donald Trump last week unveiled the levies as part of his “America First” agenda, which were met with anger across the world and from leaders in his own Republican Party.

European Union officials outlined planned retaliatory measures on targeted American exports to be rolled out if the US makes good on its threat, while China said it would make “an appropriate and necessary response”.

This week has seen sharp swings in stocks from positive to negative as predictions the measures will not be as bad as feared were offset by news Wednesday the president’s pro-trade top economics advisor Gary Cohn had resigned.

But for globalists, Thursday was positive after White House press secretary Sarah Sanders said there were “potential carve-outs for Mexico and Canada” and other countries based on national security. And Commerce Secretary Wilbur Ross insisted: “We’re not looking for a trade war.”

A final decision on the tariffs is expected soon.

“There is a feeling that President Trump may be toning down his protectionism push,” said Makoto Sengoku, market analyst at Tokai Tokyo Research Centre.

“Things may not turn out as bad as we feared before,” he told AFP.

Regional markets were mostly higher, with Tokyo climbing 0.5 percent, helped by figures showing the Japanese economy grew at a faster pace than first reported in the final three months of 2017.

– Surging trade deficit –

Hong Kong added 1.5 percent — having fallen one percent Wednesday — and Sydney climbed 0.7 percent, while Seoul surged 1.3 percent. Singapore, Wellington and Taipei were also sharply up.

Shanghai gained 0.5 percent as a report showed Chinese exports surged a blistering 44.5 percent in February but imports were up a disappointing 6.3 percent. The country’s trade surplus with the US, a key touchstone with Trump, also narrowed month-on-month but is still double last February’s figure.

World markets were already in flux since the start of last month on worries about the impact of rising US interest rates, though analysts pointed out that the world economy remained on a healthy track.

“If you look at the global economic backdrop the world still looks relatively good,” JPMorgan Asset Management Australia CEO Rachel Farrell told Bloomberg TV.

“Long-term we really look at fundamentals and fundamentals across the world are actually quite strong.”

However, market-watchers expect the volatility to continue for some time, with data showing a bigger than expected rise in the US trade deficit to a nine-year high.

The reading “didn’t help the free-trade camp as the deficit moved to a nine-year high, further stoking the protectionist fires”, said Stephen Innes, head of Asia-Pacific trading at OANDA. “The sharp widening of the trade shortfall with China is a significant point of contention.”

Oil prices edged up slightly but struggled to claw back the two percent losses suffered Wednesday on the back of a surge in US crude output. The black gold is also facing pressure from concerns over a trade war.

In early European trade London dipped 0.1 percent, Paris was flat and Frankfurt was flat.

– Key figures around 0820 GMT –

Tokyo – Nikkei 225: UP 0.5 percent at 21,368.07 (close)

Hong Kong – Hang Seng: UP 1.5 percent at 30,654.52 (close)

Shanghai – Composite: UP 0.5 percent at 3,288.41 (close)

London – FTSE 100: DOWN 0.1 percent at 7,148.71

Euro/dollar: DOWN at $1.2411 from $1.2413 at 2130 GMT

Pound/dollar: UP at $1.3910 from $1.3901

Dollar/yen: UP at 105.95 yen from 106.05 yen

Oil – West Texas Intermediate: UP six cents at $61.21 per barrel

Oil – Brent North Sea: UP five cents at $64.39 per barrel

New York – Dow: DOWN 0.3 percent at 24,801.36 (close)

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