Dhaka, Bangladesh
Asian markets on course to end week on positive note

Asian markets on course to end week on positive note

HONG KONG, July 12: Asian equities mostly rose in early trade Friday but gains were slight as investors applied the brakes after recent advances, with debate now focusing on the depth of an expected US interest rate cut, reports AFP. Donald Trump also sparked some unease after having a dig at China by accusing it of backsliding on a trade promise - just days after the two sides tentatively began phone talks on resolving their tariffs war. Still, the region is on course for a positive end to a week dominated by Federal Reserve boss Jerome Powell's congressional testimony, which all but flicked the switch on a rate cut at the end of the month. A second day of testimony Thursday essentially reiterated his point. His comments, which highlighted economic headwinds from the trade war and slowing global growth, sparked a rally on world markets. "We have a sitting (policy board) that is prepared to over-deliver on markets' expectations as… Powell's monetary policy testimony unambiguously reinforces his inclination to cut rates aggressively," said Vanguard Markets' Stephen Innes. He added that even a forecast-beating inflation report on Thursday was unable to deter traders from betting on a reduction. "Not surprisingly there is 100 percent consensus the Fed is going to cut in July. But we are still no closer to settling the 25 or 50 (basis points) July rate cut debate." In early trade, Hong Kong was up 0.4 percent and Shanghai added 0.3 percent while Tokyo went into the break marginally higher. Singapore and Seoul each gained 0.3 percent, Taipei put on 0.1 percent and Manila rose 0.3 percent. But Sydney dipped 0.2 percent, with Wellington 0.3 percent off and Jakarta 0.1 percent lower. The broad gains follow another record lead from Wall Street, where the Dow ended above 27,000 for the first time. As investors head into the weekend Trump provided a seed of uncertainty with his tweet hitting out at China, just two weeks after meeting its President Xi Jinping and telling the world that trade talks were "back on track". He accused China of not fulfilling a pledge to buy more agricultural goods, saying it was "letting us down in that they have not been buying the agricultural products from our great Farmers that they said they would". While the remark did not spark a sell-off on equity markets, observers pointed out that it highlighted how much work needed to be done before the economic superpowers reach an agreement. There are also lingering concerns about Trump's decision to order a probe into France's planned tax on internet services as Paris targets US titans Google, Apple, Facebook and Amazon. On currency markets the yen, euro and pound held gains against the dollar though the greenback clawed back some of its past days' losses against higher-yielding, riskier assets such as the South Korean won and Indonesian rupiah. Wall Street stocks set new records Thursday for a second straight session, with the Dow finishing above 27,000 points - a first - over an expected Federal Reserve interest rate cut later this month. The latest new landmark, which was accompanied by a fresh record for the S&P 500, came as Fed Chair Jerome Powell completed a second day of congressional testimony at which he emphasized economic risks in remarks that were widely interpreted as signaling a likely interest rate cut. The new high drew a cheer from US President Donald Trump, who has repeatedly criticized Powell on monetary policy. Trump extolled the latest new peak on Twitter, saying "Dow just hit 27,000 for the first time EVER!" The Nasdaq, which had closed at a record following Powell's testimony on Wednesday, pulled back slightly. It was joined lower by European bourses, which were pressured by stronger currencies after Powell's remarks weighed on the dollar. "It's safe to say that investors were pleased with Jerome Powell's first day of testimony on Wednesday, with equity markets jumping on his dovish assessment," said Oanda analyst Craig Erlam. "The Fed Chairman doesn't typically provide strong and direct messages on policy direction, which makes predicting future rate movements all the more difficult. But Wednesday's message was clear, the data is softening -particularly on the inflation side - and downside risks are significant," Erlam said. But Thursday's records came amid fresh signs of trade policy discord that have troubled investors over the last year. Trump, also on Twitter, accused China Beijing of backsliding on a recent pledge to buy more US farm exports. "Hopefully they will start soon!" Trump's latest tweet on China "means we are not closer to a deal with China," said Art Hogan, chief market strategist at National Securities. There were also fresh signs of tension between the US and Europe. On Wednesday, officials said US President Donald Trump had ordered an investigation into France's planned tax on internet services. The French parliament passed the tax anyway on Thursday, making Google, Apple, Facebook and Amazon principal targets of the higher taxes. Among individual companies, Delta Air Lines climbed 1.2 percent as it reported a nearly 40 percent surge in second-quarter profits to $1.4 billion on strong flying demand. The company also benefited from its lack of exposure to the Boeing 737 MAX, which has been grounded following two crashes. Delta does not own any of planes. In Mumbai, domestic equity benchmarks BSE Sensex and NSE Nifty started on a choppy note Friday ahead of inflation and factory output data releases, reports AFP. After jumping over 100 points in opening trade, the 30-share index pared all gains to trade 6.14 points, or 0.02 per cent, lower at 38,816.97 at 0945 hours. Similarly, the broader Nifty fell 6.30 points, or 0.05 per cent, to 11,576.60. In the previous session, the 30-share gauge settled 266.07 points or 0.69 per cent higher at 38,823.11. Similarly, the broader NSE Nifty climbed 84 points, or 0.73 per cent, to 11,582.90. On a net basis, foreign institutional investors sold equities worth Rs 316.86 crore, while domestic institutional investors purchased shares to the tune of Rs 719.74 crore, provisional data available with stock exchanges showed Thursday.Top losers in the Sensex pack in early trade included Bharti Airtel, Tata Motors, ITC, L&T, HDFC Bank, Hero MotoCorp, Bajaj Finance, PowerGrid and Axis Bank, shedding up to 1.46 per cent. On the other hand, Sun Pharma, NTPC, Yes Bank, RIL, Tata Steel, TechM and HDFC rose up to 1.21 per cent. Shares of Infosys were trading marginally higher ahead of the company's quarterly results, scheduled to be released later in the day. According to traders, investors are cautious ahead of the release of inflation and industrial production data. Market was also nervous about the ongoing trade talks between India and the US, they added. Reiterating that President Donald Trump and US Trade Representative Robert Lighthizer are frustrated with the lack of balance and reciprocity from India when it comes to trade and tariff, a top US Administration official said that the new round of discussion between the two countries is not open-ended and the US wants things to move quickly. Elsewhere in Asia, Shanghai Composite Index, Hang Seng, Nikkei and Kospi were trading on a positive note in their respective early sessions. Meanwhile, bourses on Wall Street too ended higher on Thursday. Meanwhile, the Indian rupee depreciated 7 paise to 68.51 against the US dollar. The global oil benchmark Brent crude futures were trading 0.65 per cent higher at 66.95 per barrel.

Share |