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Asian markets lifted by growing trade optimism

WT24 Desk

HONG KONG– Rising expectations that China and the United States will soon reach an interim trade deal provided fresh impetus to Asian markets on Wednesday, with Donald Trump saying the talks were “in the final throes”, AFP reports.

However, observers said that while the broad consensus is that the two
will tie up something soon, there is an underlying unease at the lack of
detail that is brewing uncertainty.

“We’re getting to the point where they need to show us the money,” said
Michael Reynolds, investment strategy officer at Glenmede Trust Co. “Talk is one thing but an actual deal on paper, pen to paper, is what is going to
dramatically change the market narrative.”

Regional investors were given another record-breaking lead from Wall
Street, with comments from Beijing and Washington adding to the confident mood in trading floors.

Trump said on Tuesday: “We’re in the final throes of a very important
deal, I guess you could say one of the most important deals in trade ever.”

He also raised the issue of unrest in Hong Kong, which has become a
touchpoint after Congress passed a bill supporting the city’s rights and sent
it to Trump to sign into law. Progress of the bill has angered Beijing,
however, and fuelled concerns it could upend the trade talks.

Trump did not indicate whether he would put his name to the bill, instead
emphasising his close ties to Xi Jinping and efforts to seal the trade
agreement.

“It’s going very well but at the same time we want to see it go well in
Hong Kong,” he said. “I think it will. I think that President Xi can make
that happen. I know him and I know he’d like to make it happen.”

– ‘Time to break bread’ –
In early trade, Hong Kong rose 0.2 percent, with e-commerce titan Alibaba
piling on more than two percent a day after its city debut that saw it rally
more than six percent.

Shanghai edged up 0.1 percent and Tokyo ended the morning 0.4 percent
higher. Sydney and Wellington jumped 0.7 percent with Singapore putting on
0.4 percent. Seoul and Taipei each gained 0.3 percent, and Manila surged 0.8
percent. Shanghai was flat.

Still, while buying sentiment remains intact, investors remain concerned
that the talks could collapse at the last hurdle, as they have in the past.

“Now it’s time for both leaders to schedule a venue and put pen to paper
on the phase one deal officially,” said AxiTrader’s Stephen Innes. “If there
was ever a time to break bread, now is the time as investors are not piling
into equities for health reasons, they’re expecting a substantial payout when
the deal is finally signed sealed and delivered.

“And they certainly won’t be in the mood to be walked down that trade talk
garden path only to run into another dead end.”

The trade outlook provided support to higher-yielding, riskier currencies
as the South Korean won, the Chinese yuan and the Australian dollar made
gains on the greenback. And the US unit advanced on the Japanese yen, which is usually considered a go-to asset in times of turmoil and uncertainty.

The pound extended losses after opinion polls showed the main opposition
Labour party closing the gap on Prime Minister Boris Johnson’s Conservatives just over two weeks before the general election.

Sterling has been given a lift in recent weeks by expectations Johnson
would win a workable parliamentary majority that would allow him to push through his Brexit plan but the latest data indicate it might not be as plain sailing as previously thought.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.4 percent at 23,458.59 (break)

Hong Kong – Hang Seng: UP 0.2 percent at 26,961.59

Shanghai – Composite: UP 0.1 percent at 2,909.47

Euro/dollar: DOWN at $1.1016 from $1.1025 at 2140 GMT

Pound/dollar: DOWN at $1.2855 from $1.2868

Euro/pound: UP at 85.70 pence from 85.68 pence

Dollar/yen: UP at 109.11 yen from 109.04 yen

West Texas Intermediate: DOWN 23 cents at $58.18 per barrel

Brent North Sea crude: DOWN 25 cents at $64.02 per barrel

New York – Dow: UP 0.2 percent at 28,121,68 (close)

London – FTSE 100: UP 0.1 percent at 7,403.14 (close)

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