Asian Shares Surge to 14-Week Highs on Trade and Data Optimism
The trading week started strong in Asia on Monday with all benchmark indexes trading higher, except for Japan’s Nikkei 225, which was closed for trading in celebration of a national holiday. Hong Kong’s Hang Seng Index led the charge, surging 1.45 percent as of 3:05 p.m. HK/SIN. South Korea’s Kopsi was close behind, trading up 1.43 percent. China’s benchmarks, the Shanghai Composite and the Shenzhen Composite were both up 0.49 percent, and Australia’s ASX 200 gained 0.27 percent.
The gains came following record closes on Wall Street on Friday, while were supported by comments from both the United States and China on Friday with expressions of optimism that a trade deal between the countries could be signed as early as the end of this month. Positive data also encouraged traders, with U.S. jobs growth slowing less than expected last month, the non-farm payroll report showed on Friday. The U.S. data was coupled with positive data out of China, where a private survey of manufacturers showed better than expected factory activity last month, Reuters reported.
And yet, while the positive data and trade announcements certainly had an immediate impact on global stock markets, some analysts remain concerned that the good news is merely cloaking a dark undercurrent. CNBC analysts have cited an increased purchase of value stocks over defensive stocks on Wall Street as a sign that buyers remain cautious about what the future holds. Likewise, several of 2019’s hottest IPOs have fallen flat after much fanfare, highlighting the fact that investors aren’t quite in the risk-taking mood. At the moment, tech stocks continue to bolster the S&P 500, but this could turn on a dime if the trade talks disintegrate, a reality that is still possible until the ink is dry.
On the currency markets, trading remained subdued in the mid-afternoon in Asia, in part due to the Japanese holiday and in part due to the lack of news announcements out on Monday. The dollar gained 0.12 percent against the yen, echoing the optimism found in the stock markets, as traders shed the safe haven yen. The Japanese currency was last trading at 108.28. The dollar eased against the euro, with the common currency gaining 0.06 percent to trade at $1.1173. New ECB President Christine Lagarde will give her first speech in her new role later on Monday, and the Australian and UK central banks will hold their policy meetings later this week, all of which are expected to interest traders this week. Seven Federal Reserve members will also be issuing public statements later this week.