Share Market: Stocks Rally on Trade Deal Optimism
SHARE MARKET – The Asian stock market kicked off this week on a positive note with hopes of a successful trade deal between the United States and China, which were reportedly close to sealing a deal that would end a bitter trade dispute.
On Sunday, a report surfaced that said Washington could remove nearly all if not all of its tariffs on Beijing. A meeting between US President Donald Trump and Chinese President Xi Jinping is set for later this month.
Last week, Trump stated that he had asked China to lift all tariffs on US agricultural products because trade talks saw great progress. The US president had also delayed scheduled plans to impose 25 percent tariffs on Chinese products.
Because of the optimism, S&P 500 e-mini futures and Dow rose 0.4 percent each on Monday. Spread-betters indicated a positive start for Europe as London’s FTSE futures gained 0.5 percent.
Chinese shares led the way in Asia, with its blue-chip index increasing as much as 3 percent. Australian shares increased 0.4 percent, while Hong Kong’s Hang Seng index gained 0.7 percent.
As a result, the MSCI’s broadest index of Asia-pacific shares ex-Japan gained 0.3 percent. This year, the index has gained nearly 10 percent so far. Meanwhile, Japan’s Nikkei bolstered more than 1 percent.
“Following a robust recovery for risk assets since the start of the year, a number of events in March are going to set the tone for global investors on whether this rebound is sustainable,” said an Asia-Pacific Chief Market Strategist from JPMorgan.
Monetary Policy Easing
March is seen as a pivotal month for global financial markets as the UK parliament is scheduled to vote on Britain’s exit from the European Union. Meanwhile, the Fed is also going to hold its policy meeting, with investors expecting clues on plans for future rate hikes and balance sheet reduction.
“While it may take time for economic data to stabilize from the current slowdown, policy shifts by central banks and governments, especially in the US and China, should help support investor confidence for now,” said the JPMorgan strategist.
Last week, a host of surveys emphasized the extent of manufacturers’ damages, especially those exposed to China’s slowdown. The lackluster data added to the expectations that the central bank policy tightening is already finished.
In the United States, February manufacturing activity slipped to its lowest since November 2016, according to ISM data. Meanwhile, a survey from the University of Michigan showed that consumer sentiment failed to reach expectations in the month.
Further, there have been tame inflation pressures and personal income fell for the first time in more than three years in January, according to a report published by the US Commerce Department.
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