Asia stocks push higher on trade hopes, China data

While there was some scepticism over Beijing's pledge to ramp up spending on US goods over the next five years, observers said it indicated that talks between the economic superpowers were heading in the right direction.
While there was some scepticism over Beijing's pledge to ramp up spending on US goods over the next five years, observers said it indicated that talks between the economic superpowers were heading in the right direction.PHOTO: AFP

SYDNEY (BLOOMBERG) - Asian stocks posted modest gains on Monday (Jan 21) as investors wagered trade tensions ultimately will subside and policy makers will refrain from growth-damaging monetary tightening.

Shares in Tokyo, Hong Kong and Sydney climbed after the S&P 500 Index hit its highest since early December on Friday. Spurring the gains was optimism around the next round of US-China trade talks at month-end and data from China that alleviated concerns of a continued deterioration in China's slowing economy.

The MSCI Asia Pacific Index gained 0.3 per cent as of 3:15pm Tokyo time. Japan's Topix index advanced 0.6 per cent.

The Hang Seng index rose 0.2 per cent while Australia's S&P/ASX 200 Index advanced 0.2 per cent.

Not all was sunny however, with US and European futures dipping and the yen strengthening after Bloomberg reported that the two sides are making little progress on the key issue of intellectual property protection. US markets are closed on Monday.

Futures on the S&P 500 dropped 0.2 per cent. The S&P 500 Index gained 1.3 per cent on Friday, to the highest since Dec 6.

Asian shares opened higher following Friday's report indicating China had offered a path to eliminate its trade imbalance with the US by ramping up purchases of goods made in America. Separate reporting showed that on intellectual property, discussions amounted more to an airing of grievances than constructive negotiations, according to participants and others briefed on the talks.

"When it comes to this trade truce, we will see a deal light, but it will really have value in name only," Eleanor Creagh, strategist at Saxo Capital Markets, told Bloomberg TV in Sydney. "Although we have the trade tensions put on ice with the tariff truce at the moment, that underlying strategic rivalry between the U.S. and China will continue."

Data on Monday confirmed China's economy expanded at the slowest pace since the global financial crisis, in line with many expectations, though December figures for industrial output and retail sales were buoyant. Still, South Korea's early trade data for January offered grimmer news on the global economy as exports fell by the most in more than two years.

Meantime, the pound was steady. Theresa May briefed her Cabinet on Sunday evening that there was little prospect of cross-party Brexit talks yielding a workable alternative plan to the one that Parliament overwhelmingly rejected last week. Instead she is seeking changes to the Irish backstop section of the deal she's negotiated with the European Union.