Asia stocks in dark on trade, seek enlightenment from Trump

Passers-by walk past an electric screen showing Asian markets indices outside a brokerage in Tokyo, Japan, 1 July – Reuters

SYDNEY (Reuters): Asian share markets edged higher on Tuesday and Europe looked set to follow as investors awaited a speech by President Donald Trump on US trade policy and on news he will likely delay a decision on whether to slap tariffs on European autos.

EU officials said Trump was expected to announce this week that he was delaying the tariff decision on cars and auto parts imported from the European Union likely for another six months.

The news boosted expectations about Trump’s speech later in the day about his administration’s long-running trade war with China.

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.5%, following a sharp 1.2% pullback on Monday.

Japan’s Nikkei, which dithered either side of flat most of the day, ended 0.8% higher. But Shanghai blue chips eased 0.2% after bank lending growth undershot analysts’ estimates, while Australian shares were down, too.

E-Mini futures for the S&P 500 rose 0.2%, while EUROSTOXX 50 futures gained 0.4%.

A positive speech on US-China trade would likely satisfy market participants even without specific details of the “Phase 1” agreement under negotiation, said Jim Paulsen, chief investment officer at The Leuthold Group in Minneapolis. Trump wrongfooted markets over the weekend when he said there had been incorrect reporting about US willingness to lift tariffs on China.

Investors also were anxious about the situation in Hong Kong after a violent escalation of protests knocked nearly 2% off Asia-exposed banks HSBC and StanChart.

Hong Kong’s embattled leader Carrie Lam on Tuesday said protesters who are trying to “paralyse” the city were extremely selfish and hoped all universities and schools would urge students not to participate in violence.

Lam was speaking a day after police shot a protester and a man was set on fire in some of the most dramatic scenes to grip the city during the more than five months of civil unrest.

Boris gets Brexit boost

A partial holiday in the United States had closed the Treasury market on Monday and made for a quiet session on Wall Street. The Dow ended up 0.04%, while the S&P 500 lost 0.20% and the Nasdaq 0.13%.

Treasuries were in demand when trading resumed in Asia, with yields on 10-year notes dropping to 1.9070% and away from last week’s three-month top of 1.97%. They were last at 1.9539.

In currency markets, the main action was in sterling which hit a six-month high on the euro on Monday after the Brexit Party said it would not contest previously Conservative held seats in the UK election.

In a boost for Prime Minister Boris Johnson ahead of the 12 December election, Brexit Party leader Nigel Farage said he did not want anti-Brexit parties to win, so was standing down candidates in seats won by the Conservatives in 2017.

The pound reached 0.8582 per euro, and firmed to $1.2856 having risen 0.6% overnight.

Against a basket of currencies, the dollar steadied at 98.224. The euro edged up to $1.1038 and away from a three-week low of $1.1015, while the dollar faded to 109.26 yen.

Spot gold suffered a third day of declines, to touch its lowest since early August at $1,447.89 per ounce. It was last trading at $1,450.44.

US crude gained 28 cents to $57.14 a barrel, while Brent crude futures added 35 cents to $62.53.