Asian Equity Markets Closed Higher On Trade Optimism
Equity markets in Asian were mostly higher in the Wednesday session after news emerged the March 2nd deadline for a US/China deal may be extended. US President Donald Trump says he will postpone the implementation of new tariffs, an additional 10% on top of an already existing 10% if a trade deal can be reached.
Secretary of the Treasury Steve Mnuchin and Senior Trade Representative Robert Lighthizer are currently meeting with Chinese Vice Premier Liu He in Beijing. According to reports from Chinese media the two may be meeting with Chinese President Xi Jinping on Friday in an effort to reach an accord before the deadline just three weeks away.
Chinese indices were up the sharpest on the news, the Shanghai Composite up nearly 1.85%, while gains in other markets were less robust. The Japanese Nikkei posted the second largest gain, about 1.35%, while the Heng Seng rose 1.16% and the Korean Kospi rose only 0.50%. The Australian ASX was the only major index in the region to close with losses, down -0.25%, despite a 5% surge in energy giant Beach Energy.
Weak Data Caps Gains In The EU
A round of weaker than expected from the EU points to a continuing slowdown of the European economy. From the EU itself, Industrial Production fell -0.9% in the last month and is down -4.2% over the last year. From the UK, the Consumer Price Index came in at 1.8% and a two-year low.
The FTSE led gains as the weak inflation data points to another year of easy money policy from the BOE, the UK-based index was up 0.60% in midmorning trade. The German DAX and French CAC were both up about 0.30%.
IN stock news, most sectors were higher although the chem-stocks were in the lead with average gains near 1.0%. Dutch bank ABN Amro reported earnings before the bell and fell more than -7.0% on the news. The banks says revenue and earnings fell short of expectations and that it may not meet its goals this year.
US Equities Rise On Good News
US equities extended Tuesday’s rally on a trifecta of good news including trade talks, the possibility tariffs will be delayed, and a deal to avert a government shutdown. The major indices were all in the green in early pre-opening trading with the tech-heavy NASDAQ Composite in the lead posting an advance near 0.45%.
The possible meeting between US negotiators and Chinese President Xi Jinping is the news of the day. The meeting, if it occurs, is unexpected and a sign the talks are advancing more rapidly than recent White House rhetoric has alleged. The meeting may result in a deal-in-principle that many believe could remove tariffs put in place last year.
In economic news, CPI was flat and tenth weaker than expected while core-CPI rose 0.2%. The data is in-line with the current FOMC outlook but helped strengthen the dollar versus the basket of global currencies.