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Apr 5, 2018

Asia, Europe and U.S. Stock markets Report on April 5, 2018.


Trade war fears, tariffs, stocks and currencies in focus

Cheang Ming

Asia Pacific markets closed higher on Thursday, as recent investor worries over an elevation in U.S.-China trade tensions abated.
Japan's Nikkei 225 advanced 1.53 percent, or 325.87 points, to 21,645.42, closing above its 200-day moving average.
The Topix gained 1.08 percent, amid broad-based gains. The Topix subindexes for banking, precision instruments and real estate stocks were among the top-performers, while steelmakers traded lower.
Meanwhile, the Kospi tacked on 1.22 percent to finish at 2,437.52, driven by gains in the tech sector as heavyweight Samsung Electronics surged 3.88 percent. The tech giant is due to release its first-quarter earnings guidance on Friday.
Shipbuilders also traded higher, while automakers slipped.


325.87 1.53%
HSI HSI 29518.69
-661.41 -2.19%
ASX 200 S&P/ASX 200 5788.80
27.40 0.48%
SHANGHAI Shanghai 3131.84
-4.79 -0.15%
KOSPI KOSPI Index 2437.52
29.46 1.22%
CNBC 100 CNBC 100 ASIA IDX 8481.39
41.50 0.49%
In Australia, the S&P/ASX 200 edged higher by 0.48 percent to end at 5,788.80, with the heavily weighted financials subindex rising 1.07 percent. Despite the broader gains on the index, the materials sector slipped 0.59 percent. Mining majors traded lower, with Rio Tinto sliding 1.19 percent.
Gains were also seen elsewhere in the region, with Singapore's Straits Times Index up by 2 percent by 3:02 p.m. HK/SIN. MSCI's broad index of shares in Asia Pacific excluding Japan last traded higher by 0.53 percent.
The improved confidence among investors in the region came after the sharp gains posted by U.S. stocks as initial fears about escalating trade tensions faded.
Hong Kong, China and Taiwan markets were closed for the Ching Ming Festival on Thursday.

US-China trade negotiation ahead?

Worries over trade rhetoric, which ramped up after China unveiled plans for additional tariffs on 106 U.S. products, waned after overtures were made regarding potential negotiation between the two countries.
Major U.S. stock averages finished higher on Wednesday after sliding earlier in the session. The Dow Jones industrial average rose 0.96 percent, or 230.94 points, to close at 24,264.30 — a bounce of more than 700 points from its session low.
Meanwhile, U.S. stock index futures pointed to gains for markets stateside, with Dow futures higher by 102 points in afternoon Asia trade. S&P 500 and Nasdaq futures also tracked higher.
"The relief is that neither party has pulled the trigger on tariffs," Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a note about the newly announced product duties.
Meanwhile, investors were hopeful that talks between the U.S. and China could mean a potential trade war would eventually be averted. China's ambassador to the U.S. said that negotiation remained China's "preference" following his meeting with acting U.S. Secretary of State John Sullivan on Wednesday, Reuters reported.
"No date has been set for the proposed tariffs put forward by China or the U.S., meaning we could see uncertainty continue for the next couple of months. This also means negotiation is still firmly on the table," ANZ analysts said in a morning note.
The juxtaposition between the ongoing U.S.-China tit-for-tat and hopes for trade talks is likely to remain in focus among investors.
"Our base case ... remains that negotiation and de-escalation will be the likely endgame. Having said that, China's proportionate response has increased the risks of further escalation in 'rhetoric' in the coming weeks," said Morgan Stanley analysts in a note.
The improvement in sentiment saw gold prices ease from the one-week highs touched overnight. Spot gold was last down 0.49 percent at $1,326.46 per ounce.
The additional tariffs announced by China on Wednesday came less than a day after the U.S. unveiled the list of Chinese imports, including high-tech products, that could be targeted in response to what the White House deems an unfair trade relationship.
The dollar extended gains against the safe-haven yen following Wall Street's overnight rebound, trading at 107.06 by 2:58 p.m. HK/SIN. That compared to levels around the 105 handle seen at the beginning of the week.
Meanwhile, the dollar index, which tracks the U.S. currency against six peers, firmed to trade at 90.250.


Europe markets: trade concerns ease

Silvia Amaro, Ryan Browne

European equities closed sharply higher Thursday as trade tensions eased.


FTSE FTSE 7199.50
165.49 2.35% 819483601
DAX DAX 12305.19
347.29 2.90% 112466347
CAC CAC 5276.67
134.87 2.62% 97617457
IBEX 35 --- --- --- --- --- ---
The pan-European Stoxx 600 closed 2.4 percent higher provisionally with every sector rising. Basic resources and technology stocks were the top-performing sectors, each up over 3 percent.
Overall, market sentiment was driven by news that the U.S. is willing to sit down with the Chinese authorities and fix their trade divergences. China presented Wednesday a list of retaliatory measures against recent proposals for U.S. tariffs on a range of Chinese products.
Looking across the European benchmark, Ubisoft topped the gains, up by 10.77 percent. The success of its latest video game "Far Cry 5" led to a ratings upgrade and drove the shares higher. Meanwhile, the health care firm BTG dropped more than 10 percent after taking an impairment charge of around 150 million pounds ($211 million), Reuters reported.
On Wall Street, stocks climbed as tech shares rose following a roller-coaster ride in the previous session.

German numbers disappoint

In corporate news, Accor Hotels announced it is buying a 50 percent stake in Mantis Group, expanding its presence in Africa and in luxury travel. Accor's stock was almost 2 percent higher.
In terms of data, service PMIs in the U.K. slowed down last month due to weather conditions and a weak consumer demand. In the euro zone, the story was similar, with heavy snow and a strong currency impacting new orders.
Earlier, German new manufacturing orders came in lower than analysts had expected, seeing a rise of 0.3 percent on the previous month.


Dow closes more than 200 points higher as Wall Street extends rebound rally

Fred Imbert, Alexandra Gibbs

U.S. stocks closed higher on Thursday as tech shares rose following a roller coaster ride in the previous trading day.
The Dow Jones industrial average rose 240.92 points to 24,505.22, with Boeing and DowDuPont as the best-performing stocks. The S&P 500 gained 0.7 percent to close at 2,662.84, with materials leading 10 sectors higher. The Nasdaq composite advanced 0.5 percent to 7,076.55.
Tech helped lead the move higher, with Facebook jumping 2.7 percent and gains of more than 1.5 percent in Netflix and Amazon.
Facebook's move came after CEO Mark Zuckerberg told reporters he has not seen a noticeable change in user behavior in the wake of the Cambridge Analytica data scandal.
Traders work on the floor of the New York Stock Exchange. Lucas Jackson | Reuters
Traders work on the floor of the New York Stock Exchange.
Chipmaker Advanced Micro Devices also rose 2.6 percent after Stifel upgraded them to a buy from hold.
The moves Thursday come after a wild trading day on Wall Street on Wednesday. The Dow Jones industrial average closed up over 200 points, rallying more than 700 points from its session low. The S&P 500 and Nasdaq erased losses to finish on a positive note as well.
"This is a market for seasoned and experienced investors," said Alicia Levine, head of global investment strategy at BNY Mellon Investment Management. "We have some serious policy issues that are at the forefront."
"It's going to be a rocky market moving forward, but that doesn't mean there's something rotten at the core of it," Levine said.
Markets have been on edge in recent sessions amid concerns of a potential trade war between China and the U.S. On Wednesday, China announced fresh tariffs on 106 U.S. products, including cars, whiskey and soybeans — less than 24 hours after the U.S. administration issued a list of Chinese imports that it would target.
The news initially sent stocks lower before bouncing back as the Trump administration tried to play down trade-war worries.
Investors have to come to terms that "market choppiness is here to stay," said Wasif Latif, vice president of equity investments at USAA. "The market is transitioning [away] from an environment with low volatility. We were in an environment where any bad news would be shrugged off."
The dollar dropped against the yen on Wednesday before recovering as investors bid up traditional safe-haven assets. On Thursday, the U.S. currency traded 0.7 percent higher against the yen.
Minh Trang, senior FX trader at Silicon Valley Bank, said he expects volatility to continue if trade tensions between China and the U.S. escalate. "If more action follows rhetoric, more traders will be spooked," he said.
In economic news, weekly jobless claims totaled 242,000, more than the expected 225,000. Still, claims remained near their lowest levels since the 1970s.
Wall Street also looked ahead to Friday's jobs report. Economists polled by Reuters expect the U.S. economy to have added 198,000 jobs in March.
"All of us expect it to be strong," said Jason Thomas, chief economist at AssetMark. "Every indication suggests the report is going to be strong. The question for the market is: Where do we go from here."

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