Asian Market: Stocks Bounced on US-China Progress
The Asian market saw an optimistic run on Monday as investors bet on the progress in US-China trade negotiations as well as on more policy stimulus coming from central banks.
Washington and Beijing are looking to continue trade talks within the week. US President Donald Trump has hinted on the possibility of an extension to the March 1 deadline for the talks. Also, both sides have claimed progress in five days on talks in Beijing last week.
“That does not rule out a setback or two between now and the start of March,” said an analyst in a note. “Even so, we still think that both sides have good reasons to want to get to an agreement. And, so motivated, it makes an agreement more likely than not.”
Boosting optimism that the two economic powerhouses will soon seal a deal, the NASDAQ and the Dow had their eight consecutive weekly gains.
In Tokyo, the Nikkei 225 soared 1.8 percent to its peak thus far in the year. Shanghai blue chips advanced 2.1 percent.
MSCI’s Asia-Pacific index of shares ex-Japan perked up0.9 percent, bouncing mostly from its losses last Friday.
Meanwhile, the market also expects powerful central banks to whip out more reflationary policies. The data on Monday that showed a large drop in Singaporean exports as well as Japanese machinery goods only emphasized the need for such stimulus.
In China, banks are making the most new loans on record in January, attempting to bolster sluggish investment.
On Wednesday, the Asian market and the world will get a hold of the Federal Reserve’s last policy meeting’s minutes.
“Given the range of speakers since the January meeting who support ‘patience,’ the Fed minutes should reiterate a dovish message overall,” said analysts.
ECB and Eurozone Economy
Meanwhile, recent data indicate a sluggish Eurozone economy, according to European Central Bank’s Olli Rehn. Until the bank achieves monetary policy targets, interest rates would stay at their current levels.
The market also predicts the ECB would kick off another round of Targeted Long-Term Refinancing Operations (TLTRO) to support bank lending. As a result, the euro slipped to three-month lows on Friday. It bounced back after the Fed’s dovish comments.
The common currency inched up 0.2 percent on Monday at $1.1312. It still stayed within its $1.1213-$1.1570 trading range, which it has held since mid-October.
The dollar held firmly against the yen at 110.53 after slipping down from a two-month peak of 111.12.
Meanwhile, the British pound was a bit stronger at $1.2913. British Prime Minister Theresa May and European Commission President Jean-Claude Juncker will meet this week to discuss a Brexit deal.
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