POST TIME: 22 February, 2019 00:00 00 AM
Asian markets mostly up on bubbling trade confidence
AFP, Hong Kong

Asian markets mostly up on bubbling trade confidence

Asian markets mostly rose yesterday on growing optimism that China and the US will finally resolve their long-running trade war, with a report saying the two sides were working on an outline for a deal.

Equities have enjoyed a stellar start to the year on hopes for the negotiations and expectations the Federal Reserve will ease up on its pace of monetary tightening as growth at home and globally slows.

The upbeat mood across the region was enhanced yesterday as Bloomberg News said negotiators were sketching out a number of memorandums of understanding on key issues including intellectual property and technology transfer.

Without naming sources, the report said no final agreement was expected in Washington this week but that China's top negotiator Liu He would meet Donald Trump Friday. After a cautious start, markets were up across Asia yesterday.

Hong Kong rose 0.4 per cent but Shanghai dipped 0.3 per cent after fluctuating through the day. The yuan was sitting around its strongest level against the dollar since July, with support also coming from other reports that the US is calling in China not to weaken it to offset the impact of tariffs.

Tokyo ended up 0.2 per cent, while Sydney rose 0.7 per cent, Wellington added 0.6 per cent and Taipei 0.5 per cent. There were also gains in Mumbai, Bangkok and Jakarta, while Singapore was flat though Seoul and Manila dipped.

In early trade London fell 0.3 per cent, while Paris added 0.1 per cent and Frankfurt put on 0.4 per cent. While there has been no concrete sign of progress in the trade talks, Trump has insisted the talks are going "very well" and has indicated he could push back a deadline for a deal to be done.

However, observers warned of turmoil if expectations were not met. "There's a lot of optimism baked into global markets on the outcome of the negotiations and precisely zero detail on the actual result," said Jeffrey Halley, senior market analyst at OANDA.

"A suboptimal outcome could make for a potentially ugly correction in equities and currencies in particular."

On Wednesday, minutes from the Fed's latest policy meeting showed its board was concerned about the global outlook and trade tensions, and said US growth would "step down" from last year's rapid pace.

It also said it expects to continue to wind down its balance sheet of securities and other assets -- which helps keep borrowing costs down -- but added "it was not yet clear" what rate moves "may be appropriate later this year".

The minutes showed there could be another hike if price pressures pick up. Analysts said there was still a possibility of more increases in borrowing costs this year, after four in 2018.