Asian shares yesterday jumped after US President Donald Trump on Thursday said he would meet with China’s top trade negotiator, stirring hopes for an agreement, while the British pound resumed its climb amid optimism over a possible Brexit deal.
European shares were mostly expected to continue the rally. Pan-region Euro STOXX 50 futures rose 0.26 percent to 3,494 and German DAX futures gained 0.29 percent to 12,209. FTSE futures were down 0.43 percent at 7,142.5 early in the day.
MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 1.3 percent yesterday afternoon in Asia. S&P e-mini futures added 0.45 percent.
Photo: AP
Australian shares climbed 0.9 percent, while Japan’s Nikkei 225 gained 1.2 percent. Chinese blue-chips were up nearly 1 percent after a slow start.
The bullish market mood came after a first day of trade talks between top US and Chinese negotiators, characterized by Trump as “very, very good.”
Even before Trump’s comments, hopes for an agreement helped to lift US markets. The Dow Jones Industrial Average on Thursday added 0.57 percent, the S&P 500 gained 0.64 percent and the NASDAQ Composite rose 0.6 percent.
While optimism around trade talks helped to drive a “classic risk-on session” overnight, the lack of runaway enthusiasm reflected broader investor caution, said Matt Simpson, senior market analyst at GAIN Capital in Singapore.
“We know that it’s just a few words from Trump,” he said.
Further positive developments in trade talks could boost markets on Monday, but low expectations for a deal mean that the lack of an agreement would not “necessarily [be] the end of the world for risk,” he added.
Analysts at National Australia Bank said freezing tariffs at current levels would be unlikely to reverse the trade-driven slowdown in economic growth.
“The uncertainty around unresolved structural issues, such as IP [intellectual property] theft and subsidies to state owned enterprises, are likely to remain deterrents for a pick-up in much needed capital expenditure,” they said in a morning note. “On this score details on a potential currency pact will be important.”
The US dollar was little changed against the yen at ￥107.98, while the euro gained 0.1 percent to US$1.1017. The pound, which had earlier given up some of the previous day’s gains, turned higher, adding 0.1 percent to US$1.2455.
The dollar index, which tracks the greenback against a basket of six major rivals, was down at 98.636 after posting its biggest daily drop in five weeks on waning safe-haven demand for the currency.
The pound had jumped nearly 2 percent on Thursday, its biggest daily gain since March, after Irish Prime Minister Leo Varadkar said a Brexit deal could be clinched by the end of this month after what he called a very positive meeting with his British counterpart, Boris Johnson.
The move away from safe havens also lifted the yield on benchmark 10-year US Treasury notes to 1.6699 percent, compared with a US close of 1.656 percent on Thursday.
Yields rose across the curve, with two-year notes yielding 1.5486 percent compared with a US close of 1.53 percent.
In commodity markets, oil prices extended gains on news of an explosion on an Iranian tanker in the Red Sea. Prices had climbed earlier after the head of OPEC said the organization could take action to balance oil markets, including a deeper cut in oil supplies, and amid hopes that progress toward ending the US-China trade war could help to revive economic growth and lift fuel consumption.
Global benchmark Brent crude was up about 2 percent at US$60.29 per barrel.
Gold, which had found its appeal tarnished by rising risk appetite, recovered some ground, with spot gold trading up 0.1 percent at US$1,495.63 per ounce.
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