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Asian markets rally on fresh hopes for trade talks

HONG KONG: Asian markets rallied Monday following a strong lead from Wall Street and comments from Donald Trump’s top economic adviser hailing “positive” trade talks with top Chinese negotiators.

Optimism that central banks will provide fresh support to head off a global economic recession has also lent much-needed support to regional equities after last week’s sell-off, with eyes on an upcoming speech by Federal Reserve boss Jerome Powell for clues about its plans.

Investors were in an upbeat mood after White House chief economic adviser Larry Kudlow said that if talks between deputies from Beijing and Washington went well and “we can have a substantive renewal of negotiations” then “we are planning to have China come to the USA and meet with our principals to continue the negotiations”.

He added that high-level phone talks last week were “a lot more positive than has been reported”.

Trump provided further cause for hope by tweeting: “We are doing very well with China, and talking!”

Kudlow also raised the prospect of using cash taken from higher tariffs on Chinese goods to pay for tax cuts.

White House recycling

“This sort of recycling won’t clear the oceans of plastic or reduce global warming, but it is an elegant solution to reducing the pain of tariffs on the American consumer of China and may give equity markets a small boost as we start the week,” said Jeffrey Halley, senior market analyst for Asia-Pacific at OANDA.

The remarks helped Asian traders build on New York’s rally.

Hong Kong led gainers, surging 1.8 percent with dealers also cheered by three days of protests in the city not descending into violence.

Shanghai rose 0.6 percent and Tokyo added 0.5 percent by the break.

Sydney climbed 0.8 percent, Singapore put on 0.3 percent and Seoul jumped 0.5 percent with Wellington, Taipei and Jakarta in positive territory.

There remains a high level of concern about the global outlook and particularly the US economy after yields on 10-year US Treasury bonds slid last week below that of the two-year note, while the 30-year yield fell below two percent for the first time ever.

The so-called “inversion” — when short-term interest rates are higher than longer-term ones — is viewed as a harbinger of recession.

But investors are hopeful that authorities will unveil stimulus to limit any impact. Germany’s Der Spiegel said Angela Merkel’s government was ready to boost public spending, while China announced an interest rate reform that it said would lower borrowing costs for companies. – AFP


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FBM KLCI to stay range-bound amid global volatility

KUALA LIMPUR: Bursa Malaysia is expected to trade range bound next week against the backdrop of global volatility and despite a stronger than expected second quarter gross domestic product (GDP) announcement.

Phillip Capital Management Senior Vice President (Investment) Datuk Dr Nazri Khan Adam Khan said the market barometer is expected to decline towards the 1580 points support level next week, driven by global weakness.

“The benchmark FTSE Bursa Malaysia (FBM KLCI) joined the global equities rout as recession fears begin to appear. This is due to inverted US treasury yields and concerns over the US economic health.

“Following the mixed performance across the globe, we expect the FBM KLCI to hold up at the 1,600 points level against a healthy domestic economic outlook,” he told Bernama.

He said on the technical front, the FBM KLCI showed a resilient break below the meaningful 1,600 points support.

“The local bourse charted a small “Bearish Harami” candlestick pattern near the aforementioned support mark, an indication that the bears are pushing against the bulls,” Nazri Khan said.

He also said the immediate support for the local bourse would stay near 1,580 points and conversely, the immediate resistance is located at 1,600 points, while the next resistance is seen at 1,630 points

For the holiday-shortened week, the FBM KLCI slid from its support level of 1,600 in tracking the performance of Wall Street with the Dow Jones Industrial Average falling more than three per cent in two days, while dubbed the worst fall of the year.

On Wednesday, the market temporarily rebounded, as US President Donald Trump delayed the extra tariffs that were expected to hit Chinese export goods to December 15.

However, the local bourse market faced contraction on Thursday again, in line with regional peers, due to heightened global uncertainty.

On Friday, the local market ended mixed backed by the better than expected second-quarter GDP which is expected to be a temporary catalyst for the FBM KLCI next week.

On a Friday to Friday basis, the FBM KLCI fell 15.83 points to 1,599.22 from 1,615.05.

Trading in the week was heavily influenced by Wall Street’s performance, the tariff delay by the US on Chinese goods, as well as Malaysia’s GDP announcement.

The FBM Emas Index declined 132.22 points to 11,308.11, the FBMT 100 Index slipped 127.22 points to 11,145.65 and the FBM Emas Shariah Index fell 83.35 points to 11,843.22.

The FBM 70 weakened 230.25 points to 14,074.12 and the FBM Ace Index declined 109.92 points to 4,587.72.

Sector-wise, the Financial Services Index slid 317.48 points to 15,524.51, the Plantation Index advanced 30.94 points to 6,758.37 and the Industrial Products and Services Index eased 2.92 points to 149.72.

Weekly turnover declined to 8.33 billion units with a value of RM6.6 billion compared with 12.45 billion units valued at RM10.11 billion.

Main Market volume contracted to 5.38 billion shares worth RM5.99 billion compared with 7.64 billion shares worth RM9.19 billion.

Warrants turnover also slid to 1.75 billion units worth RM499.52 million from 2.41 billion units valued at RM596.71 million.

The ACE Market volume also declined to 1.17 billion shares worth RM187.90 million compared with 2.40 billion shares valued at RM318.84 million. — Bernama


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