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Asian Stocks Up on Trade Deal Optimism

Asian stocks rose on Thursday, driven by hopes of the US and China soon settling a phase one trade deal.  Although gains were kept in check on contrasting statements from President Donald Trump.

MSCI’s broadest index of Asia-Pacific shares outside Japan advanced by 0.5%, while Japan’s Nikkei 225 closed the session 0.7% higher and Australia’s S&P/ASX 200 added 1.2%.

Chinese equities showed optimism as well, with the Shanghai Composite index and the blue-chip CSI300 both advancing 0.7%.

Hong Kong’s Hang Seng index also climbed by 0.5%.

Stock trading in Europe will likely follow with a slightly stronger start.

The pan-regional Euro Stoxx 50 index and London’s FTSE 100 both registered a 0.1% gain in early trade.

Stock Market Instability Likely on Trade Deal Uncertainty

A global research group stated on Wednesday that analysts’ forecasts of Asian companies’ earnings outlook have been adjusted higher for the first time in 18 months. Similar turning points in recent years had enabled a rebound in the stock market.

However, further instability is likely to occur in the short term, seeing the uncertainty in US-China trade talks.

If the two countries failed to seal a trade deal soon, the focus will have to shift to Washington’s imposition of another set of tariffs on Chinese products on December 15.

Head of investment strategy and chief economist Shane Oliver said his base case scenario is the two sides reaching some agreement.

The pressure for a deal is immense, simply because of the economic slowdown in both countries. According to Oliver, although increased volatility is seen as policy uncertainty has become constant.

The possibility of an agreement emerged. Optimism followed the news about the US and China nearing a phase one deal after Trump’s comment of the discussions going very well. Even though he had earlier said it may take until 2020 to close an accord.

Besides the trade deal, the stock market is also awaiting the latest US non-farm payrolls report.

Official figures are set to be released on Friday. They will reveal the condition of the world’s largest economy amid a global slowdown.

Stock trading might turn thin and it is likely little money going after such unpredictable headlines as the year-end approaches.

The motivation now for traders is not to lose money if they are underwater, according to chief economist and head of research Robert Carnell.

If they have made money, then they should keep it that way, Carnell said.



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