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Asian markets rise on trade hopes, weak yen

Asian markets rise on trade hopes, weak yen

Business Desk Asian shares were mostly up Tuesday as investors watched key US-China trade talks aimed at averting punitive tariffs which could slow the global economy, and a weak yen boosted exporters. Markets were also lifted by a tentative deal to avert a new government shutdown. Initial trade talks are under way in Beijing, and top-level negotiations are set for Thursday and Friday, as the deadline looms for a deal to prevent a sharp rise in US duties on billions of dollars worth of Chinese goods. “Officials on both sides of the US-China trade talks expressed satisfaction with the progress thus far,” wrote Jeffrey Halley, senior analyst at Oanda, in a commentary. Failure to agree a deal between the two economic superpowers before March would see tariffs on $200 billion worth of Chinese imports more than double. Washington is demanding far-reaching changes from Beijing on what it says are unfair commercial practices, including theft of intellectual property and barriers to foreign firms in Chinese markets. Hong Kong stocks ended the morning slightly higher Tuesday following reports of a deal to avoid a new US government shutdown, and hopes for trade talks between Beijing and Washington. The Hang Seng Index rose 0.16 percent, or 44.30 points, to 28,188.14 by the break. The benchmark Shanghai Composite Index added 0.13 points to 2,654.03, while the Shenzhen Composite Index, which tracks stock on China’s second exchange, lost 0.13 points to 1,347.81. Tokyo stocks opened higher on Tuesday helped by a cheaper yen and expectations for progress in US-China trade talks. The benchmark Nikkei 225 index rose 0.63 percent, or 127.29 points, to 20,460.46 in early trade, while the broader Topix index was up 0.50 percent, or 7.65 points, at 1,547.05. “Japanese stocks are seen rising at the start due to a cheaper yen against the dollar and after a sharp drop late last week,” Toshiyuki Kanayama, senior market strategist at Monex, said in a note. The rally came after Tokyo shares closed down more than two percent on Friday. The Japanese market was closed on Monday for a public holiday. The higher open came after global stocks mostly rose on Monday as US and Chinese officials in Beijing started preparatory trade meetings that may culminate in a meeting between US President Donald Trump and Chinese leader Xi Jinping. The dollar changed hands at 110.48 yen in early Asian trade, up from 110.37 yen in New York late Monday and 109.68 yen in Tokyo Friday. “On Sino-US trade, the one positive development… was that Presidents Trump and Xi could meet in Trump’s Florida resort of Mar a Lago in mid-March,” Ray Attrill, strategist at National Australia Bank, said in a commentary. In Tokyo, exporters were generally higher, with Toyota gaining 0.96 percent to 6,511 yen, Nissan advancing 1.43 percent to 927.4 yen, Honda adding 1.00 percent at 2,956 yen and Panasonic up 1.09 percent at 1,013 yen. Toshiba dropped 6.03 percent to 3,190 yen after it said it would revise down its full-year operating profit forecast in its third-quarter earnings report due on Wednesday. SoftBank Group was down 0.14 percent at 10,000 yen after an announcement that its SoftBank Vision Fund will invest nearly a billion dollars in Silicon Valley startup Nuro, which is working on self-driving delivery vehicles. On Wall Street, US stocks finished mixed with the Dow ending down 0.2 percent at 25,053.11 while the broad- based S&P 500 edged up 0.1 percent and the tech-rich Nasdaq Composite Index also added 0.1 percent. Several central banks have fallen in line with the Fed’s dovish stance since it held interest rates unchanged two weeks ago. Sydney rose 0.4 percent, Taipei added 0.7 percent and Seoul 0.5 percent. Germany’s DAX jumped more than 1.2 percent, after rising 1 percent on Monday, and Paris and Milan were up 0.8 percent, while London’s FTSE approached a four-month peak despite ongoing Brexit uncertainty. The dollar hovered at a two-month high and the Australian dollar also gained. The yen and Swiss franc dipped while U.S. Treasury and German bund yields edged up as investors jettisoned safe havens. “We have had two bits of relatively good news overnight - optimism about the U.S. shutdown not resuming and optimism about a trade deal,” said Societe Generale strategist Kit Juckes. “Equities are higher, bond yields are a little bit higher, yen and Swiss franc weakest overnight of the major currencies so it’s sort of risk-on rules OK!” Juckes said he reckoned there was now a 75 percent chance that a ratcheting up of U.S. tariffs on Chinese goods at the start of March will be avoided and a 95 percent chance that another U.S. government shutdown will be dodged. Those odds got a boost on Monday after U.S. lawmakers reached a tentative deal on border security funding, though aides cautioned that it did not contain the $5.7 billion President Donald Trump wants to build a wall on the Mexican border. S&P 500 e-mini futures were up nearly 0.5 percent, pointing to a solid start on Wall Street later after a choppy day on Monday. U S and Chinese officials expressed hopes the new round of talks, which began in Beijing on Monday, would bring them closer to easing their months-long trade war. Beijing and Washington are trying to hammer out a deal before a March 1 deadline, without which U.S. tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25 percent from 10 percent. Meanwhile US senators announced that an agreement in principle had been reached to avoid a new government shutdown at the end of the week. Lawmakers had warned in recent days of a budget impasse in talks dominated by US President Donald Trump’s demand for funds to build a Mexico border wall. But senator Richard Shelby, a key Republican negotiator, said a deal had been reached late Monday. Elsewhere, the British pound clawed back some losses after dropping on dismal monthly GDP and manufacturing data. Earlier, Wall Street see-sawed on Monday, rarely straying far from opening levels as investors eyed ongoing U.S.-China trade talks, potential congressional gridlock and a diminished 2019 earnings outlook. The S&P 500 and the Nasdaq eked out nominal gains while the blue chip Dow edged lower. In Washington, congressional leaders attempted to reach an agreement on border security funding in a bid to avert another government shutdown. With two-thirds of S&P 500 companies having reported, the fourth-quarter earnings season approached the home stretch. So far, 71.2 percent have posted better-than-expected profits. Fourth-quarter earnings growth is now estimated at 16.5 percent, up from 15.8 percent at the beginning of the year. But first-quarter 2019 profit growth expectations have diminished. Analysts now see the year starting with quarterly earnings dropping 0.2 percent from last year, which would mark the first contraction since the second quarter of 2016. “It speaks to concerns about the global slowdown that people are growing more aware of,” said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York. “It’s the effects of tariffs and a somewhat tighter monetary policy. “Guidance has been a mixed bag and trade uncertainty is the major connecting issue,” Pavlik added. Volume on U.S. exchanges was 6.23 billion shares, compared with the 7.43 billion average over the last 20 trading days. (Inputs taken from agencies)

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