Reuters | Jan 17, 2020 07:24
By Andrew Galbraith
SHANGHAI (Reuters) - Asian shares rose on Friday after data in China showed pressure on the world's second biggest economy may be starting to diminish.
The news along with easing trade tensions with the United States underpinned riskier assets, even as some markets took a breather in late afternoon trade.
European bourses were expected to extend the global rally after Wall Street posted more records. In early European trades, pan-region Euro Stoxx 50 futures (STXEc1) were up 0.4%, German DAX futures (FDXc1) gained 0.54% and FTSE futures (FFIc1) added 0.28%.
China's economy grew 6.0% in the fourth quarter of 2019 from a year earlier, and 2019 growth of 6.1% was the slowest in 29 years, held back by anaemic domestic demand and the damaging trade war with the United States.
The data largely reinforced recent signs of an improvement in Chinese business confidence as trade tensions eased, with Beijing and Washington sealing an initial deal on Wednesday to defuse their damaging tariff war.
Beijing is widely expected to introduce more stimulus measures in 2020 amid sluggish investment and demand.
"This is all good news and positive for the China story. All the data coming out, from industrial production, fixed asset to retail sales, they are all showing signs of bottoming out as the trade cycle bottoms out," said Daniel Gerard, senior multi-asset strategist at State Street (NYSE:STT) Global Markets in Hong Kong.
MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) was up 0.18% in afternoon trade, trimming earlier gains of as much as 0.4%.
China's blue-chip CSI300 index (CSI300) ended 0.14% higher, down from an earlier rise of as much as 0.67%. The index has rallied more than 8.5% since the beginning of December, fuelled by hopes for improved trade relations with the United States.
Australian shares (AXJO) added 0.32% to a fifth consecutive record high close, and Seoul's KOSPI (KS11) rose 0.11%. Japan's Nikkei (N225) finished up 0.45% after reaching 15-month highs earlier in the session.
MSCI's global share index (MIWD00000PUS) touched record highs and was last up 0.05%.
Analysts say global equities may find it difficult to maintain momentum from their recent rally as optimism over the U.S.-China trade truce gives way to uncertainty over the next steps in trade talks.
While a Phase 1 deal signed by China and the United States on Wednesday is seen as defusing the 18-month row that has hit global growth, experts say it is unlikely to provide much balm for broader frictions between the two countries. Most of the tariffs imposed during the dispute remain in place and a number of thorny issues that sparked the conflict are still unresolved.
"The challenge from here is how long we can maintain these improvements," said Steven Daghlian, market analyst at CommSec in Sydney.
"Speaking of the Aussie market specifically, a 6% gain in two weeks is obviously a massive challenge to replicate in the tail end of the month. You don't really see 10, 11, 12% improvements over the course of a month without any gigantic positive catalysts."
In the United States on Thursday, a combination of upbeat earnings from Morgan Stanley (NYSE:MS), rising U.S. retail sales, a strong labour market and robust manufacturing data helped to lift Wall Street to record highs.
The Phase 1 deal and the U.S. Senate's approval of a revamp to the 26-year-old North American Free Trade Agreement also boosted investor spirits.
The U.S. data supported the dollar, which held steady on Friday. The greenback hit eight-month highs against the yen before trimming its advance to rise 0.09% to 110.24. The euro was up 0.04% to buy $1.1140. (EUR=)
The rally in equities was mirrored in U.S. benchmark 10-year Treasury notes, which saw yields rise to 1.8285% from their close on Thursday at 1.809%. Yields rise as prices fall.
Gold was 0.12% higher on the spot market at $1,554.38 per ounce.
(This story has been refiled to restore dropped word in first paragraph)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.
More content, faster quotes and charts, and a smoother experience is available only on the App.