Asia Session: Trade Talks To Restart

Basking in the afterglow of a positive overnight session, Asia got another boost this morning as the U.S. and China prepare to return to the trade table.

The day had started positively for Asia stock markets as well as the China sensitive Australian and New Zealand Dollars. The morning’s session was boosted further, by the announcement by China that trade talks would reconvene in Washington DC in November.

https://www.reuters.com/article/us-usa-trade-china/china-us-to-hold-trade-talks-in-october-china-commerce-ministry-idUSKCN1VQ061 source Reuters

It was followed up with a further announcement that the PBOC was preparing to cut bank’s reserve requirements and that the central government was about to enact direct stimulus programmes via bond issuance.

https://in.reuters.com/article/us-china-economy-rrr/china-to-cut-bank-reserve-requirements-in-timely-manner-to-refuel-slowing-economy-idINKCN1VP1IO source Reuters

Currencies

Although the AUD and NZD have outperformed today, regional currencies including the CNH, are mostly unchanged against the USD. Asia appears content to await Europe’s arrive and follow its lead from there. GBP gave up some of its gains as profit-taking set in after yesterdays rally. The GPP fell 35 points to 1.2215. With the prospect of an election announcement next week, most of the good news could be priced into GBP for now.

Equities

The continued dialling down of political risk saw the S&P e-mini futures rally over 1.0%. APAC stock markets also followed, the Nikkei rising 2.17%, the Shanghai Comp 1.83%, China’s CSI 1.62% and the ASX by 0.72%. The only laggard was Hong Kong where the Hang Seng was flat after yesterdays huge rally. Markets remain sceptical that the administration’s extradition law concession will be enough to placate protestors. Across the region, markets were in the green but with more modest gains generally.

Oil

Oil gave up its initial trade news gains as profit-taking from yesterday’s impressive North America rally, weighed on prices. Brent crude is 0.30% lower at $60.55 a barrel, and WTI is 0.25% lower at $55.90 a barrel. Markets will probably be side-lined until the U.S. crude inventory data this evening.

Gold

Gold fell 12 dollars to $1544.00 an ounce after the China announcements, as investors rotated out of risk hedging positions and into equities. Overall losses were modest though with gold traders seemingly preferring to see more concrete results than headlines. Gold is supported by low bond yields and a weaker dollar with strong technical support at $1520.00 an ounce.

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