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Mar 6, 2018

Asia, Europe and U.S. markets Report on March 6, 2018.


China, trade, oil and central banks in focus

Cheang Ming

Asian stocks closed sharply higher on Tuesday as concerns over a potential trade war stemming from President Donald Trump's plan to implement tariffs on metals imports faded.
Japan's Nikkei 225 jumped 1.79 percent, or 375.67 points, to close at 21,417.76, snapping a four-day losing streak. The gains also came as the dollar firmed against the yen amid receding trade-related fears. The dollar fetched 106.23 yen at 2:45 p.m. HK/SIN after falling as low as 105.34 in the overnight session.
Exporters gained on the firmer dollar, with automakers, technology and manufacturers higher for the most part. Other large caps also recorded significant gains, with Fast Retailing up 2.81 percent.

375.67 1.79%
HSI HSI 30510.73
624.34 2.09%
ASX 200 S&P/ASX 200 5962.40
SHANGHAI Shanghai 3290.17
33.25 1.02%
KOSPI KOSPI Index 2411.41
36.35 1.53%
CNBC 100 CNBC 100 ASIA IDX 8772.19
142.68 1.65%
Over in South Korea, the benchmark Kospi advanced 1.53 percent to close at 2,411.41, with gains seen across sectors, including chipmakers. Tech heavyweight Samsung Electronics jumped 4.03 percent and SK Hynix surged 5.24 percent.
Hong Kong's Hang Seng Index gained 2.32 percent by 3:00 p.m. HK/SIN after slipping below the 30,000 level in the last session. Shares of Tencent, the most heavily weighted stock on the index, were up 4.14 percent, as other large caps also put in a strong showing. Insurer AIA rose 3.2 percent and China Construction Bank tacked on 2.96 percent an hour before the market close.
The upbeat sentiment was also evident on the mainland, with the Shanghai composite advancing 1.02 percent to close at 3,290.17 and the Shenzhen composite adding 1.17 percent to end at 1,852.22.
China's National People's Congress, which kicked off on Monday, is also underway. For the next two weeks, the large rubber-stamp parliament will move on to pass major bills and endorse personnel nominations.
Elsewhere, the S&P/ASX 200 rose 1.14 percent to end at 5,962.40, with 11 of its 12 sub-indexes closing in positive territory.
The energy and materials sectors were among the best-performing sectors, rising 1.89 percent and 1.72 percent, respectively, while the heavily weighted financials sub-index gained 0.85 percent.
In individual stocks, Japan's Kobe Steel closed higher by 0.09 percent after paring more substantial gains seen earlier. The company's Chief Executive Officer Hiroya Kawasaki is slated to step down after a data falsification scandal that erupted last year, Reuters reported, citing Nikkei.
Meanwhile, energy-related stocks and oil producers in the region rose as oil prices held onto gains after settling 2.2 percent higher in the last session. Australia's Woodside Petroleum went up 1.58 percent and Japan's JXTG Holdings advanced 3.88 percent by the end of the session, while shares of CNOOC listed in Hong Kong popped 4.44 percent by 3:00 p.m. HK/SIN.
U.S. West Texas Intermediate edged up 0.18 percent to trade at $62.68 after settling 2.2 percent higher on Monday. Brent crude futures climbed 0.11 percent to trade at $65.61.
Hyundai Heavy Industries surged 12.55 percent on the day. The shipbuilder intends to raise around $843 million in a new share issuance, Reuters reported on Tuesday.

Trade war fears ease

Stateside, the Dow Jones industrial average gained after four straight days of losses, which came after Donald Trump's announcement last week that tariffs would be implemented on steel and aluminum imports.
The tariffs encountered push back from Republican House Speaker Paul Ryan, who said he was "extremely worried" about the plan. In response, Trump indicated he would not back down from his decision.
Trump on Monday also appeared to signal those tariffs could be open to negotiation, tweeting that the tariffs will not be implemented if a "fair" NAFTA agreement is reached.
U.S. stock indexes recorded gains of more than 1 percent, with the Dow closing up 336.70 points, or 1.37 percent. Elsewhere, European markets appeared to shrug off concerns over the prospects of a hung parliament in Italy.
"Investors were relieved that China did not retaliate over the weekend but with President Trump singling out China by calling them 'the biggest problem,' it's only a matter of time before the Asian giant responds," Kathy Lien, managing director of FX strategy for BK Asset Management, wrote in a note.
The dollar index, which tracks the greenback against a basket of currencies, was steady at 89.984 at 2:45 p.m. HK/SIN after climbing above the 90 handle in the last session.
Meanwhile, the Australian dollar last traded at $0.7772, above Monday's close of $0.7761. Reaction in the currency to the Reserve Bank of Australia's decision to hold rates steady, a move widely expected by markets, was fairly muted.
— CNBC's Huileng Tan contributed to this report. 


European stocks close higher as fears of trade wars abate

Sara Sjolin

European stocks posted gains across the board on Tuesday, as concerns over the inconclusive Italian election result and fears of a global trade war ebbed.
Markets, however, trimmed advances in the afternoon after U.S. stocks dipped into negative territory.

What are markets doing?
 The broad-based rally came as investors put fears over a global trade war behind them for now. Those concerns were sparked last week when U.S. President Donald Trump’s said he would impose tariffs on steel and aluminum imports and that “trade wars are good, and easy to win.”
But on Monday, Republican leaders, including House Speaker Paul Ryan, warned that the tariffs could jeopardize U.S. economic growth and began lobbying for the president to reconsider the move.

“We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan,” Ryan spokeswoman AshLee Strong said.
The European Union has threatened to slap a 25% tariff on some U.S. goods, if the tariffs come into effect, according to reports.
Sentiment in Europe was also lifted by news that North Korea is willing to discuss scrapping its nuclear program and will meet for a summit with the South in April.
European stocks were shrugging off concerns over Italy’s political landscape. The election on Sunday showed around half of the voters supported the anti-establishment 5 Star Movement and Northern League, seen as reviving the populist threat in Europe. However, the two parties are unlikely to team up in a coalition, and analysts expect a protracted period of political horse trading for a new government to emerge.
Analysts at UBS said a government is unlikely to be appointed before April and that “volatility may increase over the short term.”
Read: Italy’s election resulted in political gridlock as expected — what that means for stocks
Also read: 5 things to know about Italy’s Matteo Salvini, the populist eyeing the prime minister job
Which stocks are in focus?
Shares of Thales SA HO, +6.26%  rallied 6.3% after the aerospace-and-defense company said net profit fell 13% on 2017, but that it had exceeded all of its financial objectives for the year.
Telecom Italia SpA TIT, +5.95%  gained 6% after Bloomberg reported that activist hedge fund Elliott Management is building a stake in the Italian company.
Shares of Smurfit Kappa Group PLC SKG, +19.67%  soared 20% after the packaging company rebuffed an offer proposal from International Paper Co. IP, -2.32%  .
Shares of Tesco PLC TSCO, +3.43% TSCDY, +4.01%  put on 3.4% and Wm. Morrison Supermarkets PLC MRW, +0.09%  added 0.1%. The moves came after a survey from Kantar Worldpanel showed the two supermarkets chains were the fastest-growing grocers in the U.K. over the last 12 weeks.
Aggreko PLC AGK, -3.95%  slumped 4% after the power supplier said pretax profit declined in 2017.
Just Eat PLC JE., -12.56%  slumped 13% after the takeaway company swung to a pretax loss in 2017. It announced extra investment to boost its delivery services.
Ashtead Group PLC AHT, -5.50%  lost 5.5%. The industrial equipment rental company posted an increase in third-quarter profit, but also said finance director Suzanne Wood is to step down from her role on March 31.
What are strategists saying?
“With the U.S. president keen to put ‘America first’, it now appears that the talk of tariffs was a ploy to improving his position in relation to altering the North American Free Trade Agreement (NAFTA), to the advantage of the U.S. As the prospect of a trade war has cooled, traders are now feeling more confident about snapping up equities,” said David Madden, market analyst at CMC Markets UK, in a note.


U.S. stocks close modestly higher as trade-war jitters linger

Sue Chang, Ryan Vlastelica
 U.S. stocks closed moderately higher Tuesday after a session marked by swings in and out of negative territory as investors debated the potential impact of a trade war in the wake of President Donald Trump announcing a pair of tariffs, a strategy that has faced opposition from key Republicans such as House Speaker Paul Ryan. 
What did the main benchmarks do?
 The Dow Jones Industrial Average DJIA, +0.04% rose 9.36 points to 24,884.12. The S&P 500 SPX, +0.26% climbed 7.18 points, or 0.3%, to 2,728.12. The Nasdaq Composite Index COMP, +0.56%  gained 41.30 points, or 0.6%, to 7,372.01.
Materials and consumer discretionary sectors led the market, while utilities and health care lagged.

Read: Here’s what the 30 Dow industrials companies say about a potential trade war
What were strategists saying?
Strategists well-versed in Korean affairs played down the significance of the attempted rapprochement on the Korean Peninsula, given that such breakthroughs in the past have failed to lead to a lasting detente.
“I think [Kim Jong Un] is buying himself some time because they are feeling the pinch of sanctions. But no way he is actually going to ‘de-nuke.’ So he extends a false olive branch to catch his breath,” said Ian Winer, head of the equities division at Wedbush Securities. “The next time he launches or retaliates to U.S. drills, he can say: ‘I tried to talk.’”
“It was hard to evaluate what negative impact the Korea situation was having on the market, if any, but the possibility of war risk in Asia was the biggest uncertainty out there, and [the summit] could help eliminate that. Even if the risk seemed remote, that’s a net positive for the market,” said George Schultze, a hedge-fund manager and founder of Schultze Asset Management.
“Meanwhile, it seems like investors are starting to suspect that Trump’s tariff announcement could just be an opening gambit in his renegotiations over Nafta, so the threat may not be as bad as some are fearing.”
Despite that, he noted that “we’ve already seen a big run” in equities, suggesting further gains at current levels may be difficult to come by absent new positive news.
What was on the economic docket?
Investors will continue to follow Federal Reserve speakers for insights into the central bank’s views on the economy. Dallas Fed President Rob Kaplan said he still expects three interest-rate increases this year, and that he wants to get started soon. Recent volatility in the market has come as investors fret that inflation could be returning to the economy, and that the Fed could have to become more aggressive in combating such a scenario. However, most investors interpret a more aggressive stance as four rate increases this year.
Read: Trump, trade wars, inflation: Wall Street on edge ahead of February jobs report
Which stocks were in focus?
Target Corp. TGT, -4.46%  fell 4.5% despite reporting quarterly revenue that came in ahead of analyst expectations.
Qualcomm Inc. QCOM, -2.92%  fell 2.9% as Broadcom Ltd. continued to woo the U.S. company’s investors to agree to a hostile takeover. The Department of Treasury is looking into the company’s request to review Broadcom’s AVGO, +1.61%  bid amid concerns over potential national security risks. Shares of Broadcom were up 1.6%.
Read: Qualcomm meeting on hold, but Broadcom drama still heats up
United Parcel Service Inc. UPS, +3.77%  rose 3.8% after Stifel Nicolaus upgraded the stock, citing its valuation and dividend yield.
Marinus Pharmaceuticals Inc. MRNS, -13.71%  slumped 14% after it reported a 2017 loss that was wider than expected.
CommerceHub Inc. CHUBA, +23.15%  agreed to be bought by private-equity firm Sycamore Partners in a cash deal valued at $1.1 billion. The stock spiked 23%.
International Paper Co. IP, -2.10%  shares dropped 2.1% after the company indicated that it will continue to pursue a potential buyout of Smurfit Kappa Group PLC even after the Irish packaging company rejected its initial overture.
How did other markets fare?
European stocks SXXP, +0.13%  were firmly higher and Asian markets jumped across the board, led by a 2% rise for Hong Kong’s Hang Seng Index HSI, +2.09% .
In other assets, the ICE Dollar Index DXY, -0.47%  dropped 0.5% to 89.60, while crude CLJ8, -0.37%  slipped 0.2% and gold prices GCJ8, +1.20%  settled higher.
Barbara Kollmeyer contributed to this article


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