Asian shares rise on China's policy easing, trade deal hopes

Reuters SHANGHAI | Updated on January 02, 2020 Published on January 02, 2020

Asian shares kicked off the new decade higher on Thursday, after global stocks ended the previous one at record highs, and buoyed by Chinese markets after Beijing eased monetary policy to support slowing growth.

Investors also cheered news that the United States and China will sign a trade pact soon after a year of volatile negotiations between the world's two largest economies.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.35 per cent in morning trade after rising 5.6 per cent in December.

US President Donald Trump said on Tuesday that Phase-1 of trade deal with China would be signed on January 15 at the White House, though uncertainty surrounds details about the agreement.

Rising hopes for a resolution to the US-China trade war helped propel global equities to record highs late last year and depress the value of the US dollar.

MSCI's all-country world index of stock performance in 49 nations touched an all-time high of 567.80 on December 27. It was last quoted at 565.46, off 0.41 per cent from that peak.

In China, the blue-chip CSI300 index, one of the world's best-performing indexes last year, was 1.34 per cent higher in early trade. China's central bank on Wednesday that it would cut the amount of cash that banks must hold as reserves, releasing around 800 billion yuan in funds effective January 6.

“I think the monetary angle in terms of what it means for the companies, is not that important,” said Jim McCafferty, head of Asia ex-Japan equity research at Nomura in Hong Kong. “However for what it means for the consumer point of view, then clearly if there's easy money and ... individuals can borrow cheaply, repay debt quickly, then that of course is going to help the economy and the companies.”

McCafferty said he expects a memory up-cycle and new handset development prompted by the rollout of 5G mobile technology could help to lift tech-heavy markets like Korea and Taiwan this year.

Australian shares flicked between small gains and losses, and were last up 0.2 per cent. Seoul's Kospi began the year down 0.85 per cent, while shares in Taiwan added 0.51 per cent. Markets in Japan are closed for a national holiday.

The gains in Asia follow a bullish end to the year on Wall Street on Tuesday. The Dow Jones Industrial Average rose 0.27 per cent to 28,538.44 and the S&P 500 gained 0.29 per cent to 3,230.78. The Nasdaq Composite added 0.3 per cent to 8,972.60.

In currency markets on Thursday, the dollar continued to weaken slightly against major peers as investors bet on a better outlook for global growth and trade. The dollar was 0.06 per cent weaker against the yen at 108.64 while the euro gained 0.11 per cent to 1.1222. The dollar index, which tracks the greenback against a basket of six rivals, was little changed, rising 0.04 per cent to 96.427.

US crude was up 0.36 per cent to $61.28 and global benchmark Brent crude rose to $66.24 per barrel, building on a rise that gave oil its biggest annual gain in three years in 2019.

Gold, which has benefited from a weaker greenback, was up 0.18 per cent on the spot market, fetching $1,519.64 per ounce.

Published on January 02, 2020
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