HONG KONG: Asian markets mostly rose Thursday as regional investors began to return from their Lunar New Year break, though Tokyo edged lower after a negative lead from Wall Street.
Most trading floors have re-opened but business remains light, with Hong Kong and Shanghai still closed, while focus turns on the resumption next week of China-US trade talks in Beijing.
The two sides will try to hammer out a deal to resolve their long-running tariffs row, with markets broadly hopeful just three weeks before a deadline that will see the US more than double levies on hundreds of billions of dollars worth of Chinese goods.
Donald Trump has said he plans to meet his Chinese counterpart Xi Jinping before the end of the month to put the finishing touches to any deal, which would be in both countries’ interest as the global economy begins to wobble.
Sydney climbed more than 1% and Wellington put on 0.7% with investors cheered by the prospect of an extended period of low interest rates.
Seoul edged up 0.1% and Singapore put on 0.8% with Manila and Jakarta also well up.
However, Tokyo fell 0.6% despite a near 18% surge in SoftBank, its biggest rise in a decade, fueled by news of a US$5.5 billion share buyback using cash from last month’s listing of its mobile phone unit.
On currency markets the New Zealand dollar tanked more than 1% on the back of weak jobs data, while the Australian dollar extended Wednesday’s sell-off that was fueled by comments from the country’s top central banker hinting interest rates would not rise any time soon.
May’s tough mission
Analysts pointed to their correlation to China’s economy, which is stuttering at the moment, uncertainty on Wall Street and nervousness ahead of the trade talks.
Dealers are also looking ahead to the Bank of England’s latest policy meeting later in the day, which comes as the government struggles to push through its Brexit plan and concerns build that the country will leave the EU without a deal on March 29.
It also follows a number of dovish statements from central banks around the world as their boards grow increasingly worried about the global economic outlook.
BoE boss Mark Carney “has been quite vocally Brexit’s Angel of Death and an uber-dove for quite some time, but with central banks shifting policy stance around the world, tonight’s BoE rate decision and Carney’s missives could have a real impact on the pound”, said OANDA senior market analyst Jeffrey Halley.
The pound has weakened more than 2% against the greenback in the past 12 days as investors grow increasingly worried about a so-called hard Brexit.
Prime Minister Theresa May heads to Brussels Thursday in a bid to alter her deal with the EU, but with most observers saying she has very little chance of success.
May will head for the meeting “with the words of the President of the European Council (Donald Tusk) ringing in her ears that there is a ‘special place in hell’ for the people who promoted Brexit without any plan to do it”, said Michael Hewson, chief market analyst at CMC Markets UK.
“Given the tone of those comments … it seems highly unlikely that she’ll get any changes to the withdrawal agreement before next week’s vote in the House of Commons, if it even takes place, something that is looking increasingly unlikely.”