Asian markets enjoyed another rally yesterday as a report said China and the US were closing in on a deal to end their long-running trade row.
The pound extended gains after British Prime Minister Theresa May said she would look for another Brexit delay and softened her position on the issue to avert a calamitous no-deal divorce from the European Union.
While Wall Street provided a flat lead, Asian investors built on recent gains, with optimism given an extra boost by a report in the Financial Times saying Beijing and Washington were on course for a historic agreement.
Expectations that the world’s top two economies will eventually sign a deal has been a key driver of a global equities rally this year and the FT article adds to the general sense of hope.
It comes after better-than-expected factory data out of China and the US that eased worries about growth in the global economy, while a dovish turn from central banks has also provided support.
“Recent positives such as the US Federal Reserve pausing their interest rate increases, incremental signs of progress on China-US trade negotiations and a dovish bias from China’s (central bank) to support growth have given investors a sunnier attitude about risk assets,” Tai Hui, chief market strategist for Asia Pacific at JP Morgan Asset Management, said.
Hong Kong jumped more than 1% — having risen for six straight days — Shanghai climbed 1.2% and Tokyo was 1% higher.
Sydney gained 0.7%, while Seoul rose 1.2% and Singapore piled on 0.9%, with Taipei, Manila, Mumbai and Bangkok also higher.
The pound extended Tuesday’s jump after May, who is struggling to get her Brexit agreement through parliament, said she would request a second delay to the April 12 divorce day that is “as short as possible and which ends when we pass a deal”.
She also said she would work with the leader of the opposition Labour Party, Jeremy Corbyn, who favours closer ties with the European Union, indicating she is willing to take a softer Brexit than she had hoped.
The news cheered investors who fear the impact of a no-deal exit on the economy.
However, there remains a lot of uncertainty as May’s decision to work with Corbyn fuelled anger among hardline Brexiters in her own party.
In Tokyo, the Nikkei 225 closed up 1.0% to 21,713.21 points; Hong Kong — Hang Seng ended up 1.2% to 29,986.39 points and Shanghai — Composite closed up 1.2% to 3,216.30 points yesterday.
An external view of the stock exchange building in Hong Kong. The Hang Seng closed up 1.2% to 29,986.39 points yesterday.
