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 been in a swoon since Donald Trump last week unveiled levies on steel and aluminium imports as part of his “America First” agenda, but 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.

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 that 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.

“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 ending the morning session 0.8 percent higher, 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 more than one percent and Sydney climbed 0.6 percent, while Singapore, Seoul, Wellington and Taipei were also well up.

Shanghai was slightly up ahead of the release of Chinese trade data.

World markets were already in flux since the start of February on worries about the impact of rising US interest rates, though analysts pointed out that the global 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.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.8 percent at 21,411.38 (break)

Hong Kong – Hang Seng: UP 1.1 percent at 30,535.20

Shanghai – Composite: FLAT at 3,272.37

Euro/dollar: DOWN at $1.2404 from $1.2413 at 2130 GMT

Pound/dollar: DOWN at $1.3900 from $1.3901

Dollar/yen: UP at 106.13 yen from 106.05 yen

Oil – West Texas Intermediate: UP 14 cents at $61.29 per barrel

Oil – Brent North Sea: UP 14 cents at $64.48 per barrel

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

London – FTSE 100: UP 0.2 percent at 7,157.84 (close)

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