TOKYO (Reuters) – Asian equities rallied on Thursday after the Trump administration contacted China after a new round of trade talks that raised hopes of a solution to the bitter collective bargaining dispute between the world's two largest economies.
FILE PHOTO: Men walk past an electronic blackboard showing market indices outside a brokerage firm in Tokyo, Japan, March 2, 2016. REUTERS / Thomas Peter / File Photo
In spite of Asia's gains, spreads suggested that European equities plummeted, with the UK FTSE. FTSE down 0.1 per cent, the German DAX .GDAXI 0.24 per cent, and the French CAC .FCHI 0.3 per cent ,
MSCI's broadest index for Asia-Pacific equities outside Japan. The index rose 0.6 percent, one day after it hit 14-month lows.
At the start of the day, China's A-shares (.SSEC) shot at 1.2 percent hopes for lower trading tensions, then most of that gain was extinction, but in the afternoon the index rallied again, allowing it to rise 0.6 percent.
The Japanese Nikkei .N225 gained 1.0 percent. On Wall Street, the S & P 500 .SPX rose 0.04 percent on Wednesday.
Leading US officials led by Treasury Secretary Steven Mnuchin recently sent an invitation to their Chinese counterparts, including Deputy Prime Minister Liu He, to hold another bilateral trade meeting.
The story comes when more than 85 US industry groups launched a coalition on Wednesday to publicize the fight against President Donald Trump's trading tariffs.
Trump's fares have risen far beyond what the corporate world once envisioned as the government prepared to activate tariffs on $ 200 billion worth of Chinese goods and a wide range of handheld Internet technology products and consumer goods Bikes to reach furniture.
"Public support for Trump has dropped in recent weeks, and the Democrats are likely to conquer the House of Representatives, and he probably needs some success in the trade before the midterm elections," said Mutsumi Kagawa, chief global strategist at Rakuten Securities in Tokyo.
"So there could be a shift in his trade policy, he will certainly keep his hard line rhetoric, but his administration can try to do some business backstage," he said.
However, many market participants remained cautious.
"While we agree that this should bring relief in the short term, the way forward can be even more tricky," said Tai Hui, chief market strategist for JP Morgan Asset Management, Hong Kong, which noted concessions made by China earlier this year.
"China may not be able to offer much more, especially when it comes to adapting its 'Made in China 2025' policy," he said in a note.
However, any signs of easing the tensions should benefit most from China and other Asian courtiers when they bear the brunt of protectionist protests in the US. Trading tensions have shaken global riskier assets in recent months as policymakers and investors worried about the impact on the global economy.
MSCI's broad emerging market index. MSCIEF has slumped more than 20 percent since its high in January and entered the bear market area.
World shares: reut.rs/2CSmT5k
"This assessment that growth in the US is strong and the rest is weak should reverse, and I see some signs of this in economic surprise indicators, and the gap in economic expectations between the US and Europe or Japan is too great "Luca Paolini, chief strategist of Pictet Asset Management, based in London, said US equities accounted for 62 percent of the developed market.
This is the highest level since the 1970s, according to Thomson Reuters Datastream.
US stocks in developed markets: reut.rs/2CSqiRD
In the foreign exchange market, the dollar eased somewhat on the hopes of the trade talks as well as the soft US wholesale price data, which undermined the case for an accelerated tightening of monetary policy by the Federal Reserve.
US producer prices fell unexpectedly in August and saw their first decline after 1-1 / 2 years. They pointed to accelerated inflation following Friday's strong payroll data.
The Euro was trading at $ 1.1624 =, extending its gain to 0.6 percent this week. The yen weakened Thursday by 0.2 percentage points to $ 111.47 per dollar. JPY = trade facilitation.
Sterling GBP = D4 held close to a six-week high of $ 1.3087 as the Brexit support legislators in the party of British Prime Minister Theresa May publicly pledged their support to keep them in power.
The European Central Bank and the Bank of England hold political meetings on Thursday, but interest rates are generally expected to remain unchanged.
Perhaps a political meeting of the Turkish central bank to raise interest rates to support the battered lira may attract more attention.
Lira TRYTOM = D3 has lost more than 40 percent of its value against the dollar this year, fueled by concerns over President Tayyip Erdogan's influence on monetary policy and a diplomatic row between Ankara and Washington.
The lira crisis has hit some other emerging markets with weak fundamentals, such as B. extended significant current account deficits.
The lira was trading at $ 6.3700 per dollar, up 0.7% from the week, well below its record low of 7.240 reached a month ago.
Oil prices fell and reversed some of the strong gains from the previous session as economic concerns cast doubt on rising fuel demand.
Brent futures LCOc1 reached $ 80 a barrel on Wednesday, but fell to $ 79.31 in Asia, a decrease of 0.5 percent a day.
Additional reporting by Daniel Leussink; Cut by Shri Navaratnam and Richard Borsuk