Asian Markets Rise On U.S.-China Trade Deal Optimism



Asian stock markets, led by Japan, are rising on Friday following news that the U.S. and China have agreed to a phase one trade deal in principle, that now requires U.S. President Donald Trump's approval. In addition, exit polls showing a clear majority for Prime Minister Boris Johnson's Conservative Party in the UK elections also boosted sentiment.


The Australian market is advancing following the record closing highs overnight on Wall Street after Trump said that a U.S.-China trade deal was very close.


The benchmark S&P/ASX 200 Index is adding 31.20 points or 0.47 percent to 6,740.00, after touching a high of 6,751.30 earlier. The broader All Ordinaries Index is rising 32.50 points or 0.48 percent to 6,843.30. Australian stocks closed lower on Thursday.


The major miners are notably higher. BHP and Fortescue Metals are rising more than 2 percent each, while Rio Tinto is advancing almost 2 percent.


Among the big four banks, ANZ Banking, Westpac and National Australia Bank are higher in a range of 1.2 percent to 1.9 percent, while Commonwealth Bank is adding 0.3 percent.

Commonwealth Bank, which has been reviewing employee entitlements since 2017, said it will pay as much as A$53.1 million it owes staff in unpaid entitlements.


Oil stocks are also mostly higher after crude oil prices rose overnight. Woodside Petroleum is rising 0.6 percent and Santos is adding 0.5 percent, while Oil Search is edging down 0.1 percent.


Bucking the trend, gold miners are weak after safe-haven gold prices edged lower overnight. Evolution Mining is lower by more than 3 percent and Newcrest Mining is losing almost 2 percent.


Xero said it has appointed former Telstra chief executive David Thodey as chair following the retirement of Graham Smith from the board due to family health issues. The cloud accounting software firm's shares are down 0.1 percent.


In the currency market, the Australian dollar rose to its highest level against the U.S. dollar since July. The local currency was quoted at $0.6930, up from $0.6881 on Thursday.

The Japanese market is notably higher and the safe-haven yen weakened following the record closing highs overnight on Wall Street after Trump said that a U.S.-China trade deal was very close.


Investors shrugged off the Bank of Japan's Tankan survey results that showed business confidence among Japan's big manufacturers fell to its lowest level in almost seven years in the fourth quarter.


The benchmark Nikkei 225 Index is gaining 536.60 points or 2.29 percent to 23,961.41, after touching a high of 23,969.82 earlier. Japanese shares edged higher on Thursday.

Market heavyweight SoftBank Group Corp. is advancing almost 1 percent and Fast Retailing is gaining more than 3 percent.


The major exporters are higher on a weaker yen. Panasonic, Mitsubishi Electric and Sony are rising more than 2 percent each, while Canon is advancing almost 1 percent.


Among auto stocks, Honda Motor is up more than 2 percent and Toyota Motor is higher by almost 2 percent. In the oil sector, Inpex is gaining more than 2 percent and Japan Petroleum is advancing almost 2 percent after crude oil prices rose overnight.


In the tech space, Tokyo Electron is gaining more than 4 percent and Advantest is rising more than 2 percent.


Among the other major gainers, Sumitomo Heavy Industries is gaining almost 5 percent, while Mitsui E&S Holdings, Yaskawa Electric, Japan Steel Works and Omron Corp. are all rising more than 4 percent each.


On the economic front, the Bank of Japan's quarterly Tankan Survey on business sentiment revealed that large manufacturing in Japan weakened again in the fourth quarter of 2019, with a diffusion index score of 0. That was shy of expectations for +3 and down from +5 in the three months prior. The outlook offered little optimism, also coming at 0 - versus expectations for +3 and down from +2.


The large non-manufacturers index came in at +20, beating forecasts for +16 but down from +21. The outlook came in at +18, beating forecasts for +16 and up from +18.


In the currency market, the U.S. dollar is trading in the mid 109 yen-range on Friday.


Elsewhere in Asia, Hong Kong rising almost 2 percent, South Korea is higher by more than 1 percent and Shanghai is advancing 1 percent. Singapore, Indonesia, Malaysia and Taiwan are also higher. Bucking the trend, New Zealand is lower.


On Wall Street, stocks closed higher on Thursday after U.S. President Donald Trump expressed optimism about a potential U.S.-China trade deal. "Getting VERY close to a BIG DEAL with China. They want it, and so do we!" Trump said in a post on Twitter just after the start of trading. Reports said negotiators have agreed on the terms of a phase one trade deal that now requires Trump's approval.


The Dow advanced 220.75 points or 0.8 percent to 28,132.05, the Nasdaq climbed 63.27 points or 0.7 percent to 8,717.32 and the S&P 500 jumped 26.94 points or 0.9 percent to 3,168.57.


The major European markets also moved to the upside on Thursday. While the U.K.'s FTSE 100 Index advanced by 0.8 percent, the German DAX Index climbed by 0.6 percent and the French CAC 40 Index rose by 0.4 percent.


Crude oil prices moved higher on Thursday after Trump commented the U.S. was very close to entering into a trade deal with China. WTI crude for January rose $0.42 or about 0.7 percent to close at $59.18 a barrel.




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