HONG KONG: Asian markets fluctuated Wednesday following a record-breaking close on Wall Street that was fuelled by strong earnings from US big-hitters.
The S&P 500 and Nasdaq scaled all-time highs while the Dow came close after a string of better-than-forecast results from the likes of Coca-Cola, Twitter and Lockheed Martin added to a raft of other recent reports that suggest the economy is in rude health.
Markets welcomed “a really great string of earnings reports, most of them outpacing expectations, as well as some pretty good commentary on future estimates from CEOs”, Jim Paulsen, chief investment strategist at Leuthold Weeden, told Bloomberg News.
“There’s quite a bit of positivity carrying this to new highs.”
However, while Asian dealers were generally upbeat they were unable to use the Wall Street performance to kick on in early trade, with major indexes shifting in and out of positive territory through the morning.
Hong Kong and Shanghai were each down 0.2 percent in the morning while Tokyo headed into the break flat and Seoul slipped 0.7 percent.
However, Sydney rose one percent as a drop in Australian inflation raised the chances of an interest rate cut by the country’s central bank. The reading sent the Australian dollar plunging one percent.
Singapore, Taipei and Manila each rose 0.2 percent, Wellington added 0.7 percent while Jakarta inched up slightly.
Oil prices retreat after rally
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin travel to Beijing next week for another round of high-level talks aimed at resolving their painful tariffs war.
The White House issued a statement saying the latest negotiations “will cover trade issues including intellectual property, forced technology transfer, non-tariff barriers, agriculture, services, purchases and enforcement”, adding that Chinese officials will visit Washington on May 8.
Expectations the talks will eventually end with an agreement between the economic superpowers has helped fire a rally across world markets this year, with the initial row having been the catalyst for a sharp sell-off at the end of 2018.
On oil markets both main contracts were in retreat a day after hitting six-month highs on the back of news that Washington would end a waiver for several countries from US sanctions on Iran.
Prices had already been surging thanks to hopes for the China-US talks and, OPEC and Russia’s output cap, and unrest in Libya and Venezuela.
There is speculation OPEC kingpin Saudi Arabia could step in to fill the void left in the market by the removal of Iranian crude, which would temper prices.
But SPI Asset Management’s Stephen Innes said Riyadh could balk at such a move, having opened the taps when the US unveiled sanctions six months ago only to be “hoodwinked” by the waivers.
“If the US is fully committed to their hawkish Iranian pledge… prices will reprice higher as Saudi Arabia appear tentative about increasing supplies, while it is unlikely (US) shale can fill the void quick enough,” Innes said in a note.
“So to what degree oil markets tighten, and how high oil price goes, will now mostly be dependent on the supply response from OPEC+ group.”
HONG KONG: Asian markets fell Thursday as investors in most countries wound down going into the long Easter break, with positive comments on the China-US trade talks and healthy Chinese growth unable to fire buying activity.
Donald Trump’s key trade negotiator Robert Lighthizer is reportedly preparing to visit Beijing at the end of the month for another round of top-level talks aimed at ending the long-running tariffs spat.
The Wall Street Journal story was followed by the president saying he was optimistic the talks would be “successful”, and telling reporters there would be an announcement “very, very shortly”.
The upbeat developments were the latest to give hope for an end to a row that has dragged on the global economy and contributed to a market sell-off at the end of last year.
However, investors seemed unmoved, with Wall Street ending down and Asia also in the red on the final day of business before Easter.
OANDA senior market analyst Jeffrey Halley said the fact that markets “continue to bumble along in sideways ranges” indicated “a lot of good news — both present and future – is already baked into prices at these levels.
“Ahead of the extended Easter holidays and into the end of the month, the markets may be much more vulnerable to negative headlines than they have been in recent times.”
World markets have enjoyed a stellar year so far thanks to trade talk hopes as well as a more dovish stance by central banks, led the Federal Reserve saying it will not lift interest rates this year.
In early trade Hong Kong and Shanghai were each down 0.5 percent, Seoul shed 0.9 percent and Singapore eased 0.1 percent. Tokyo went into the break 0.5 percent lower.
Wellington and Taipei were also lower, though Sydney was flat.
Jakarta jumped more than one percent — and the rupiah rose 0.5 percent — as early polls suggested business-friendly incumbent Joko Widodo was on course to win Indonesia’s presidential election.
Oil prices edged down after Wednesday’s losses that were fuelled by a smaller than anticipated drop in US inventories and worries the US could extend waivers linked to Iranian sanctions.
“Traders are exercising a high degree of caution as the White House has been very cryptic with regards to policy, which is potentially setting up the catalyst for prices to knee jerk lower if the administration decides to increase Iran waiver limits,” said Stephen Innes at SPI Asset Management.
“All the while talk of Moscow backing out of (a deal with OPEC to cut output) continues to percolate.”
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BEIJING: China said on Friday it “regrets” a World Trade Organization ruling in Washington’s favour over a dispute on Chinese subsidies to wheat and rice producers.
The decision comes as the world’s top two economies try to hammer out an agreement to settle a long-running trade row that has rattled global markets.
The US in 2016 alleged that China doled out US$100 billion in “market price support” for wheat and rice as well as corn production, above levels agreed to at the Geneva-based WTO.
“The expert group did not support the Chinese position on the calculation of the subsidy level for our minimum purchase price policy on wheat and rice. The Chinese side regrets this,“ the commerce ministry said in a statement.
China is the world’s largest producer of wheat and rice, holding significant sway over world markets.
WTO experts said they had found that each year from 2012 to 2015, China’s market price support for wheat, Indica rice and Japonica rice “exceeded its 8.5% de minimis level of support for each of these products”.
“Government support for domestic agriculture, guaranteeing farmers’ income, and maintaining food security are common practices in all countries and permitted by WTO rules,“ the ministry said in the statement attributed to the head of its treaty and law department.
“China has always respected WTO rules and will carefully evaluate the expert group’s report, and properly handle it according to the WTO dispute settlement procedures,“ it said.
Both sides have up to 60 days to appeal Thursday’s ruling.
US Trade Representative Robert Lighthizer and Agriculture Secretary Sonny Perdue earlier hailed the ruling as a “significant victory for US agriculture” saying they hoped China would quickly come into compliance. — AFP
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