TOKYO, Feb 19 — Asian shares hovered near a four-month peak today, supported by hopes that Sino-US trade talks were making positive progress and expectations of policy stimulus from central banks.
While investors were without any firm directional cues with US markets shut yesterday for public holiday, sentiment remains broadly buoyant with the Stoxx 600 index of European shares hitting four-month highs.
MSCI’s broadest index of Asia-Pacific shares outside Japan was little changed in early trade, staying near Wednesday’s four-month peak while Japan’s Nikkei was almost flat.
Reports of progress in trade talks between the United States and China have prompted investors to be mildly optimistic that the two countries could reach a compromise to avoid tariff hikes on March 1, although few details from the talks have emerged.
US President Donald Trump said last week he might extend his March 1 deadline, which would stop an immediate increase in tariffs on US$200 billion (RM816 billion) worth of Chinese imports to 25 per cent from 10 per cent.
Reflecting changing sentiment, Chinese shares have risen rapidly so far this month, with MSCI’s China A shares index up 6.5 per cent, by far the best performance among major markets.
Additionally, investors are now seen returning to riskier asset markets after the US Federal Reserve signalled earlier this year it could halt rate hikes in light of US economic softness.
“Starting with the Fed, the world’s central banks are no longer leaning towards tightening. The Fed’s turnaround stemmed the dollar’s strength, allowing central banks in emerging markets to seek easy monetary policy too,” said Shuji Shirota, head of macroeconomic strategy at HSBC Securities.
“The global economy is not necessarily in strong shape now but we are in a ‘mini-goldilocks’ environment,” he said.
In currency markets, the euro and other risk-sensitive currencies remained underpinned by hopes on US-China trade talks though most currencies were stuck in familiar ranges.
The euro changed hands at US$1.1311, off Friday’s three-month low of US$1.1234.
A run of soft European economic data, including Germany’s GDP figures, has weighed on the common currency.
Comments from European Central Bank’s Olli Rehn on Sunday have fanned speculation the European Central Bank would launch another round of Targeted Long-Term Refinancing Operations (TLTRO) to support bank lending.
The dollar stood at ¥110.59 yen, stepping back from Thursday’s seven-week peak of 111.13.
Sterling traded at US$1.2919, with an eye on Brexit talks between Britain and the European Union.
The precious metals market was slightly more lively, with palladium surging to a record high of US$1,458.5 per ounce as stricter emissions standards are seen increasing demand for the autocatalyst metal.
Gold rose to a near 10-month high of US$1,327.40 per ounce.
Oil prices held firm at three-month highs owing to a growing belief among investors that Opec’s supply cuts will prevent a build-up in unused fuel.
Brent futures rose to as high as US$66.83 yesterday, hitting their highest levels since mid-November.
US crude futures rose 0.5 per cent in early Tuesday trade to US$55.86. — Reuters
