Asia stocks firm as trade war fears ease, euro buoyant

Thursday, 12 April 2018 00:00 -     - {{hitsCtrl.values.hits}}

TOKYO (Reuters): Asian stocks were firm on Wednesday as investors lapped up the positive mood in markets after China’s President Xi Jinping helped ease fears over a US-China trade row, while the euro hovered near two-week highs.

In overnight trade, Wall Street rallied strongly, taking the baton from a solid Asian session that was driven by Xi’s speech seen as striking a more conciliatory stance following a week of tit-for-tat tariff threats between Beijing and Washington.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent.

Australian stocks added 0.1 percent and Japan’s Nikkei edged up 0.15 percent.

The Dow advanced 1.8 percent, the S&P 500 rose 1.7 percent and Nasdaq added 2.1 percent overnight after Xi on Tuesday pledged to further open up the economy and promised to cut import tariffs on products including cars.

“The United States and China are still at a phase in which they are attempting to probe the intentions of the other,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

“While China showed how far it can go, the markets won’t settle down until the two powers reach an actual agreement. The next focal point is how the United States responds.”

In currencies, the euro was a shade higher at $1.2362 EUR= and on its fourth session of gains.

The common currency was not far from a two-week high of $1.2378 scaled overnight after European Central Bank policymaker Ewald Nowotny told Reuters in an interview that its 2.55-trillion euro bond buying program would be wound down by the end of this year.

The euro has risen about 3 percent this year on expectations that the ECB would eventually normalise monetary policy and hike interest rates.

The dollar was steady at 107.170 yen JPY= after gaining 0.4 percent overnight as an uptick in risk appetite weakened demand for its Japanese peer, often sought in times of market turmoil and political tensions.

The dollar index against a basket of six major currencies was little changed at 89.562 after shedding 0.3 percent the previous day.

Gold hits 1-week peak on dollar weakness, geopolitical concerns

Bengaluru (Reuters): Gold prices touched a one-week high on Wednesday, as the dollar fell to two-week lows and as a host of geopolitical factors stoked demand for the safe-haven metal.

Spot gold rose 0.4% to $1,344.16 an ounce as of 0704 GMT, its fourth straight session of gains. Prices earlier hit a one-week high of $1,345.35 an ounce. US gold futures gained 0.2% at $1,348 an ounce. “Lots of things are happening at the same time – the (US-China) trade war, a possible US attack on Syria that navigates to conflict between the United States and Russia, and that has a very strong impact on gold markets,” said Yuichi Ikemizu, Tokyo branch manager at CIBC Standard Bank.

Russia and the United States tangled on Tuesday at the United Nations over the use of chemical weapons in Syria as Washington and its allies considered whether to strike at President Bashar al-Assad’s forces over a suspected poison gas attack last weekend.

“Dollar price movements and political developments are driving markets right now, including gold,” said Jordan Eliseo, chief economist at gold trader ABC Bullion. 

The dollar index, which measures the greenback against six other major currencies, was down 0.1% at 89.518, after earlier falling to 89.472, its weakest since 28 March.

A weaker dollar makes bullion cheaper for holders of other currencies.

“In the short-term, gold may well remain range-bound as it has for some time, though there are no shortages of catalysts that could send it higher,” Eliseo said.

Spot gold may retest a resistance at $1,354 per ounce, said Reuters’ technical analyst Wang Tao.