Asian equities on Friday rose as investors went into the weekend on an upbeat note, with an eye on the easing of lockdowns and mostly improving economic data, which offset geopolitical tensions and second wave worries.
Reports that China pledged to ramp up its purchase of US agricultural goods as part of its “phase one trade” deal also provided support to investors.
After three months of big gains across the planet — fueled by the reopening of economies, as well as trillions of US dollars in government and central bank support — markets appear to be leveling out as investors await the next major catalyst, such as a vaccine.
Photo: AP
However, while countries continue to ease business and jobs-destroying containment measures, the virus is spiking in several places including Beijing, Tokyo, Germany, Florida and Texas.
“Concerns over the spread of COVID-19 in some US states in particular where hospitalization rates are rising, and also following the recent outbreak in Beijing, continue to cast something of a pall over markets,” said Ray Attrill, head of FX strategy at National Australia Bank.
Adding to the unease are simmering tensions between the two Koreas as well as China and India following a deadly border skirmish this week in the Himalayas.
US President Donald Trump on Thursday provided uncertainty by tweeting that the US “certainly does maintain a policy option, under various conditions, of a complete decoupling from China. Thank you!”
The message came a day after US Trade Representative Robert Lighthizer told a congressional committee that China so far has been living up to the terms of a “phase one” agreement that eased the dispute, and that decoupling the two economic giants was now impossible.
While observers see it unlikely the superpowers would break off all economic activity, the comments were the latest volley from Trump over China as he aims for re-election in November.
However, Bloomberg News on Friday said Beijing planned to boost its imports of farm goods including soybeans and corn from the US, easing concerns about the trade pact signed in January, which had been called into question due to rising tensions between the nations.
After a slow start to the day, Asian markets pushed higher to end the week on a healthy note.
In Hong Kong, the Hang Seng was up 0.73 percent at 24,643.89, increasing 1.41 percent for the week, while China’s Shanghai Composite Index rose 0.96 percent to 2,967.63 and gained 1.64 percent for the week.
In South Korea, the KOSPI rose 0.37 percent to 2,141.32, up 0.42 percent for the week, while the TAIEX rose 0.01 percent to 11,549.86, posting a weekly gain of 1.05 percent.
Japan’s TOPIX bucked the trend losing 0.02 percent to close at 1,582.80, but increased 0.77 percent for the week.
“Local investors will feel encouraged by China’s rapid response to curtailing the virus spread in Beijing, something that we will likely see across the region when other small outbreaks emerge,” said Stephen Innes, chief global market strategist at AxiCorp. “Great for consumer confidence, knowing that the small outbreaks are quickly contained while the practice of social-distancing measures will keep the curve flat until a vaccine is in hand.”
However, BlackRock managing director Kate Moore said there was too much uncertainty on trading floors to have any confidence in what will happen in the future.
“No one at this point, analysts, companies, strategists, portfolio managers, has a great sense for what earnings will be in 2020 or in 2021,” she told Bloomberg TV. “We are experiencing a lot of dislocations in the economy and consumption patterns and it is pretty difficult to predict.”
Additional reporting by staff writer
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