Sep 20, 2019: Asian markets edged up Friday as investors turn their attention to the China-US trade talks, while keeping an eye on the Gulf region after last week's air strikes on Saudi oil facilities fanned geopolitical tensions.
With a delegation from China in the US to prepare for higher-level negotiations next month, there are hopes the economic powerhouses can find a solution to their tariffs row that has dragged on the global economy for a year.
Stock markets have enjoyed a broadly positive September thanks to hopes for the talks, with both sides appearing to offer olive branches and sounding less confrontational than they did in July and August.
A shift by central banks to easier monetary policies — or a desire to do so — is providing some much-needed support to equities, though there was some disappointment in the Federal Reserve's lack of forward guidance this week for further interest rate cuts.
Still, there is an expectation that more measures were likely on the way, with Kate Warne, investment strategist at Edward Jones, telling Bloomberg TV: “There's a lot more monetary stimulus coming into the system.”
In early trade Hong Kong rose 0.3 percent after a four-day sell-off, though investors are on alert for further protests in the city following clashes between pro-democracy demonstrators and police last weekend. Shanghai also added 0.3 percent and Tokyo went into the break 0.4 percent higher.
– 'Dangerous game' –
Sydney gained 0.7 percent as investors grow optimistic the Australian central bank will cut interest rates again at its next policy meeting, while Seoul and Taipei added 0.2 percent. Singapore edged up 0.1 percent and Wellington put on 0.4 percent.
However, traders are on edge in case of further attacks on Saudi Arabia at the weekend following the devastating strikes that crippled two of its biggest oil plants on Saturday and sent the price of crude soaring.
Both main contracts stabilised this week after the initial shock but there are worries of a possible conflict after the US and Saudi Arabia pointed the finger at Iran and said they were considering their response.
Adding to concerns, Iran's Foreign Minister Mohammad Javad Zarif warned Thursday that any military strike on the country could lead to “all-out war”.
“It is hard to see oil markets wanting to sell crude heavily ahead of the weekend and the event risk that entails,” said Jeffrey Halley, senior markets analyst at OANDA.
“In fact, that would be a very dangerous game as the threat of more attacks from Iran or its proxies have, if anything, increased, not decreased given the enfeebled global response this week.”
– Key figures around 0230 GMT –
- Tokyo – Nikkei 225: UP 0.4 percent at 22,142.42 (break)
- Hong Kong – Hang Seng: UP 0.3 at 26,563.22
- Shanghai – Composite: UP 0.3 percent at 3,007.28
- Euro/dollar: UP at $1.1052 from $1.1043 at 2030 GMT
- Dollar/yen: DOWN at 107.93 yen from 108.03 yen
- Pound/dollar: UP at $1.2526 from $1.2523
- Euro/pound: UP at 88.23 pence from 88.12 pence
- West Texas Intermediate: UP 64 cents at $58.77 per barrel
- Brent North Sea crude: UP 48 cents at $64.88 per barrel
- New York – Dow: DOWN 0.2 percent at 27,094.79 (close)
- London – FTSE 100: UP 0.6 percent at 7,356.42 points (close)