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Asian markets tick up after Trump tweets

Asian markets tick up after Trump tweets

Business Desk A series of tweets by Donald Trump playing up the chances of a trade deal with China provided a much-needed boost to Asian equities Wednesday but investors trod cautiously as analysts warned of more volatility to come. After more than doubling tariffs on $200 billion of Chinese goods last week — sparking retaliation from Beijing — the US president has threatened to hit a further $300 billion with more levies if he does not get his way in high-stakes talks. However, in a series of tweets Tuesday, Trump gave markets some hope that a deal between the economic titans will eventually be struck. “When the time is right we will make a deal with China”, he wrote, adding that his “respect and friendship with President Xi (Jinping) is unlimited”. He went on to say: “We can make a deal with China tomorrow, before their companies start leaving so as not to lose USA business” and said it would be “game over” if the Federal Reserve “matched” Chinese support measures. The remarks, while again accusing China of backsliding in the trade talks, provided some optimism, while weak data out of China on industrial output, retail sales and investment highlighted weakness in the economy but fuelled hopes for growth-boosting measures. Shanghai ended 1.9 percent higher and Hong Kong put on 0.5 percent. “This sharp slowdown increases the likelihood that we will probably see further attempts by China to help stimulate its economy, as well as raising concerns that any hopes of a Chinese economic rebound helping to prompt a global pickup in economic activity look a little bit forlorn at this point in time,” said Michael Hewson, chief market analyst at CMC Markets UK. Tokyo stocks closed higher on Wednesday, snapping a seven-day losing streak, as investor sentiment improved following gains in Chinese shares. The benchmark Nikkei 225 index rose 0.58 percent or 121.33 points to end at 21,188.56, while the broader Topix index was up 0.60 percent, or 9.17 points, at 1,544.15. “Tokyo shares moved into positive territory following gains in Chinese shares,” Okasan Online Securities said in a commentary. But Okasan noted that “the uncertainty over the US-China trade talks cannot be discounted”, even though optimistic comments from US President Donald Trump helped US shares recover earlier losses on Tuesday. “When the time is right we will make a deal with China,” Trump tweeted, adding that his “respect and friendship with President Xi is unlimited”. However, Trump also said the Federal Reserve could retaliate with cheap money in response to China’s easy monetary policy. “China will be pumping money into their system and probably reducing interest rates, as always, in order to make up for the business they are, and will be, losing,” he said on Twitter. “If the Federal Reserve ever did a ‘match’ it would be game over, we win! In any event, China wants a deal!” The dollar fetched 109.68 yen in Asian trade, against 109.62 yen in New York. In Tokyo, Sony jumped 3.99 percent to 5,473 yen while SoftBank Group climbed 3.20 percent to 10,315 yen. Nissan plummeted 6.47 percent to 785.8 yen after the crisis-hit automaker said its net profits declined 57 percent year-on-year to a near-decade low of 319 billion yen ($2.9 billion). Its rival Toyota was up 0.62 percent to 6,570 yen and Honda was flat, inching up 0.07 percent to 2,805 yen. Some electronics shares were higher, with Sharp gaining 1.80 percent to 1,070 yen and electronic parts maker Rohm rising 2.92 percent to 7,380 yen. Sydney rose 0.7 percent and Seoul added 0.5 percent. Seoul, Taipei, Wellington, Manila and Mumbai were also well in positive territory but Singapore and Jakarta fell. In early trade, London was flat, Paris shed 0.4 percent and Frankfurt fell 0.3 percent. Both the US and China have said they will resume talks in Beijing but with no date yet set, dealers are looking ahead to a possible meeting between Trump and Xi at the G20 in Japan at the end of June. “It’s just too early to tell if this is a buy (on equity markets), on slightly oversold conditions, or if it’s the start of stabilisation,” Gina Martin Adams, chief equity strategist at Bloomberg Intelligence, told Bloomberg TV. “Our working thesis is that we’re going to be in for a period of volatility for most of the next month as we await the G20 meeting.” And OANDA senior market analyst Jeffrey Halley warned that “sentiment remains fragile and subject to the whims of trade headlines on either news tickers or social media accounts”. He added that while some gains could be expected “one suspects a lot of money will remain on the sidelines as we await more clarity on the trade situation”. Oil prices dipped in Asian trade on Wednesday following a surprising rise in US crude stockpiles but remain propped up by tensions in the Middle East. Major producer Saudi Arabia said Tuesday a pumping facility on the Red Sea had been attacked by armed drones, an act claimed by Yemeni rebels. That came days after sabotage attacks on four ships, including two Saudi Arabian oil tankers, in the United Arab Emirates. “Trade issues will continue to cap gains in Asia, but if anything, the incidents on opposite sides of Saudi Arabia will bring home how vulnerable the flow of oil is from the Middle East,” said Halley. In Mumbai, Mumbai, May 15, 2019 (BSS/PTI) – The rupee appreciated by 23 paise to 70.21 against the US dollar in opening trade Wednesday, driven by easing crude prices, higher opening in domestic equities and on US-China trade talk hopes. Forex dealers said, investors sentiments were buoyed after US President Donald Trump on Tuesday hoped that the world’s top two economies would be able reach an agreement. The rupee opened strong at 70.32 at the interbank forex market then gained further ground and touched 70.21 amid a positive opening in domestic equities, displaying gains of 23 paise over its last close. The rupee Tuesday recovered 7 paise to close at 70.44 to the US dollar. “I think it’s going to turn out extremely well, we’re in a very strong position,” Trump said. The President also described his relationship with President Xi Jinping of China as “extraordinary”. When asked about the talks with China having “collapsed”. He rejected that characterisation. “We have a very good dialogue… it’ll always continue. We had a deal that was very close and then they broke it,” he said. Meanwhile, foreign fund outflows weighed on the domestic currency and restricted the upmove. Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 2,011.85 crore on a net basis Tuesday, provisional exchange data showed. Brent crude futures, the global oil benchmark, eased 0.31 per cent to USD 71.02 per barrel. Meanwhile, the benchmark BSE Sensex was trading higher by 87.83 points, or 0.24 per cent to quote at 37,410.15 while the NSE Nifty was trading at 11,245.00, down by 22.95 points, or 0.20 per cent. Earlier, Wall Street stocks finished solidly higher on Tuesday, bouncing from the prior session’s rout amid ongoing uncertainty over the prospects for a US-China trade deal. The Dow Jones Industrial Average ended at 25,532.05, up 0.8 percent, winning back about one third of the Monday’s loss. The broad-based S&P 500 also climbed 0.8 percent to 2,834.41, while the tech-rich Nasdaq Composite Index jumped 1.1 percent to 7,734.49. Among individual companies, Walt Disney gained 1.4 percent after announcing it reached agreement with Comcast to take control of streaming service Hulu. Comcast, which holds a 33 percent stake, advanced 1.5 percent. (Inputs taken from agencies)

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