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Asian markets resume rally on earnings hopes, trade optimism

AFP

Hongkong

Asian markets chalked up healthy gains Monday as investors cheered a strong start to the US earnings season, while Donald Trump’s treasury chief indicated trade talks with China were in their end-stage.

The gains put a regional equities rally back on track after last week’s stutter, supported by data last week showing a sharp jump in credit growth in China as easing measures kick in, while exports beat expectations and inflation perked up.

New York’s three main indexes provided a positive lead after Wall Stret titan JP Morgan recorded a pick-up in profits, suggesting the economy remains in rude health and fuelling optimism for upcoming corporate reports.

“The environment of easier financial conditions is beginning to have an impact on the broader economy,” Binay Chandgothia at Principal Global Investors told
Bloomberg TV.

“If that is the case and growth does pick up, you’ll see an uptick in analyst expectations and earnings as well, which should help continue the rally.”

In early trade Hong Kong was up 1.1 per cent while Shanghai jumped 1.8 per cent, with investors looking ahead to the release of Chinese growth figures Wednesday. Tokyo went into the break 1.5 per cent higher, Singapore gained 0.2 per cent, while Wellington added 0.4 per cent and Seoul and Taipei both jumped 0.7 per cent.

Manila and Jakarta were also up though Sydney edged down slightly.

Investors were back in a buying mood after last week’s gyrations that came on the back of concerns about a possible new trade war between the US and the European Union as Trump threatened to hit the bloc with tariffs over subsidies to aviation giant Airbus.

Buying was also being supported by comments from Treasury Secretary Steven Mnuchin, who said at the weekend that he was “hopeful we’re getting close to the final round of concluding issues” on the China trade talks.

The remarks were picked up as another positive sign that the trade war between the world’s top two economies, which helped hammer global markets last year, could be nearing an end.

The International Monetary Fund said the world economy should start to bounce back towards the end of the year, as long as China and the US resolve their differences.

US officials are also kicking off two days of trade talks with Japan later in the day in Washington with both sides previously saying they wanted to reach an agreement quickly.

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