April 29, 2019: Asian markets were mixed Monday as investors struggled to track another record lead from Wall Street that was fuelled by more strong earnings and a jump in US economic growth, while China-US trade talks come back into focus.
After a shaky performance last week, caused by global growth worries, regional equities got off to a positive start and the broadly upbeat mood saw higher-yielding currencies make inroads against the dollar.
The S&P 500 and Nasdaq chalked up all-time highs Friday helped by a forecast-beating report from Ford and Amazon revealing that quarterly profits had more than doubled.
The earnings were the latest in a long line of strong performances from some of the world's biggest firms that have surprised many observers who had been preparing for a tepid announcements season.
Adding to the upward momentum was data showing the world's biggest economy expanded 3.2 percent in January-March, well up from forecasts and sharply higher than the 2.2 percent seen at the end of 2018.
“Friday's better-than-expected US first-quarter GDP reading… was mainly supported on strong trade and inventory data, but the key takeaway remains the underlying economy is well and is not nearing a recession anytime soon,” said OANDA senior market analyst Edward Moya.
However, observers warned that while the reading was good, the underlying data pointed to some weaknesses that could see growth ease later in the year.
Hong Kong rose 0.5 percent, while Singapore added 0.8 percent, Seoul put on 0.7 percent and Wellington edged up 0.4 percent.
However, Shanghai slipped 0.7 percent, with trade weighed by concerns that Chinese authorities will wind back on recent market-boosting monetary easing measures. Sydney slipped 0.6 percent, while Taipei, Manila and Jakarta also fell.
Tokyo is closed all week.
– Oil extends losses –
Eyes now turn to Beijing where top US negotiators will return for another round of trade talks with their Chinese counterparts, with the White House saying issues to be covered include intellectual property, forced technology transfer, agriculture and enforcement.
While the general consensus is for the two to eventually reach a deal to end their long-running trade war there are still a number of sticking points, and Trump has warned he is willing to walk away from talks of he is not happy with their progress.
Both main oil contracts extended losses after falling three percent Friday after Donald Trump said Saudi Arabia and others in OPEC had agreed to his request to boost production.
After touching six-month highs last week on a US decision to end waivers for countries buying from sanctions-hit Iran, crude tanked after Trump tweeted: “Spoke to Saudi Arabia and others about increasing oil flow. All are in agreement.”
However, Stephen Innes at SPI Asset Management said he still saw prices rising.
“We still think OPEC will be careful not to signal a rapid supply response to the Iran waivers, having a preference — regardless of President Trump's consternation — to let prices drift higher until demand side pressure starts to mount,” he wrote in a note.
“The market has been tunnel (visioned) on Iran sanctions waivers, but we should not lose sight of the swamp in Venezuela nor the tenuous state of affairs in Libya as both these hotspots should continue to support oil prices.”
On currency markets the dollar was down against the pound and euro on slightly improved risk appetite, while other higher-yielding units including the Australian dollar, South African rand and Indonesian rupiah also enjoyed support.
– Key figures around 0300 GMT –
Hong Kong – Hang Seng: UP 0.5 percent at 29,747.54
Shanghai – Composite: DOWN 0.7 percent at 3,066.05
Tokyo – Nikkei 225: Closed for a holiday
Euro/dollar: UP at $1.1156 from $1.1149 at 2100 GMT Friday
Pound/dollar: UP at $1.2928 from $1.2917
Dollar/yen: UP at 111.63 yen from 111.60 yen
Oil – West Texas Intermediate: DOWN 21 cents at $63.09 per barrel
Oil – Brent Crude: DOWN 20 cents at $71.95 per barrel
New York – Dow: UP 0.3 percent at 26,543.33 (close)
London – FTSE 100: DOWN 0.1 percent at 7,428.19 (close)