Asian markets rose on Friday, although investors remained cautious as they awaited developments after the failure of a US-North Korea summit while also keeping an eye on an India-Pakistan standoff.
A better-than-expected reading on US economic growth lifted sentiment, while optimistic comments from a top White House economic adviser on China-US trade talks also provided support.
The gains helped the region complete another strong week, despite disappointment over the North Korea talks in Hanoi, Vietnam, and renewed tensions in Kashmir.
The Shanghai Composite led gains on Friday, surging 53.05 points, or 1.8 percent, to 2,994.01, jumping 6.8 percent from a close of 2,804.23 on Feb. 22 and extending a rally that has seen it climb by about one-fifth since the start of the year thanks to expectations over the trade talks.
Adding to the interest in Chinese equities was news that index compiler MSCI Inc is to increase the weighting of Chinese-listed stocks in its benchmark indices and nearly double the number of companies included.
With those indices used by global funds for their investments, the move is expected to attract tens of billions of US dollars in additional funds to the country’s markets.
Also on Friday, a private gauge showed that factory activity in China improved last month and beat expectations, providing hopes for stability in the world’s No. 2 economy.
Thanks to a weaker yen, Tokyo’s Nikkei 225 on Friday gained 217.53 points, or 1 percent, to 21,602.69, a 0.8 percent increase from 21,425.51 a week earlier.
Hong Kong’s Hang Seng on Friday rose 178.99 points, or 0.6 percent, to 28,812.17, slightly down from a close of 28,816.30 on Feb. 22.
Sydney rose 0.4 percent, Singapore and Wellington each edged up 0.3 percent and Jakarta put on 0.9 percent. Taipei and Seoul were closed for public holidays.
Traders brushed off a negative lead from Wall Street that came after data showed that the US economy grew in the fourth quarter of last year at a much slower pace than the previous three months, but was much better than forecasts.
White House National Economic Council Director Larry Kudlow cheered markets after he told CNBC that “progress has been terrific” on the China-US trade talks.
While there was still work to be done, he said that he thought the two sides were “headed toward a remarkable, historic deal.”
The news soothed worries on trading floors after US Trade Representative Robert Lighthizer appeared to temper expectations for an agreement.
Kudlow’s remarks had “gone some way to reversing the creeping pessimism about the likelihood of a comprehensive Sino-US trade deal being ready to sign by the two countries’ presidents later this month,” National Australia Bank Ltd’s Ray Attrill said.
Investors were left to await the next moves in the Pakistan-India crisis, which has fueled worries of a confrontation between the nuclear-armed neighbors.
While they have each looked to play down the threat of war, observers have said that the limited communication between them widens the scope for misunderstanding.
The breakdown of talks between Trump and North Korean leader Kim Jong-un also surprised, with both sides giving conflicting reasons for the failure, although Pyongyang said that they agreed to continue “productive” discussions on denuclearization.
Taiwanese shares closed flat on Wednesday, the last day of trading in Taipei this week before the four-day 228 Peace Memorial Day holiday.
The TAIEX on Wednesday ended down 2.38 points at 10,389.17, gaining 0.6 percent from a close of 10,322.92 on Feb. 22.
Additional reporting by staff writer
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