Asian stocks gain despite US-China trade jitters
The mainland Chinese markets, watched in relation to Beijing’s trade fight with Washington, mostly advanced: The Shanghai composite gained around 0.39 percent to close at about 2,601.72. The Shenzhen component rose 0.29 percent to finish its trading week at approximately 7,595.45 while the Shenzhen composite shed earlier gains to close 0.176 percent lower at about 1,319.97.
Hong Kong’s Hang Seng index gained 1.65 percent to 27,569.19. Shares of Chinese tech juggernaut Tencent bounced 4.12 percent on the back of the company receiving approvals for two new games after months of waiting.
“This is a fourth round of approvals and finally Tencent get two games, I think investors will view this as a good sign that (the) China government is finally approving some games for Tencent,” Jackson Wong, associate director at Huarong International Securities, told CNBC’s “Street Signs ” on Friday.
“Approval for Tencent’s games is very important because unlike other gaming companies, Tencent can utilize or monetize their games very well,” Wong said, in reference to the tech giant’s ability to make money from its games.
The Nikkei 225 in Japan added about 0.97 percent to close at 20,773.56 while the Topix index gained 0.87 percent to finish its trading day at 1,566.10. Shares of conglomerate Softbank Group rose 1.83 percent.
Before the market open, official data showed core consumer prices in Tokyo rose 1.1 percent on-year in January, beating an estimated 0.9 percent increase predicted in a Reuters poll. The inflation measure accounts for oil products but does not include fresh food prices.
South Korea’s Kospi advanced 1.52 percent as shares of industry heavyweight Samsung Electronics and chipmaker SK Hynix extended their gains from Thursday.
In Australia, the ASX 200 rose 0.68 percent to close at 5,905.60, with most sectors seeing gains.
The heavily-weighted financial subindex added about 0.37 percent as shares of the country’s so-called Big Four Banks gained. Australia and New Zealand Banking Group was up 1.04 percent, Commonwealth Bank of Australia rose fractionally, Westpac advanced 0.62 percent and National Australia Bank added 0.65 percent.
“Global financial markets continue to crave certainty on a number of issues and are still finding trends hard to come by as they are pushed and pulled in either direction on an almost daily basis,” analysts at Rakuten Securities Australia said in a morning note.
Asia-Pacific Market Indexes Chart
|NIKKEI||Nikkei 225 Index||NIKKEI||20773.56||0.00||0.00|
|HSI||Hang Seng Index||HSI||27569.19||0.00||0.00|
|ASX 200||S&P/ASX 200||ASX 200||5905.60||39.90||0.68|
|CNBC 100||CNBC 100 ASIA IDX||CNBC 100||7738.26||116.55||1.53|
Ross’ comments come as China and the U.S. are racing to strike a trade deal by early-March. If they don’t, additional U.S. tariffs on Chinese goods will come into effect. The two economic powerhouses have been engaged in an ongoing trade fight since last year.
“I think there are fundamental differences here between ... the two largest economies in the world,” Jonathan Pain, author of The Pain Report, told CNBC on Thursday.
Recalling U.S. Vice President Mike Pence’s speech at Washington’s Hudson Institute last year, Pain said Pence’s words “basically told me that the United States and China are engaged in a long-term economic war.”
“My personal view is that (U.S. President) Donald Trump actually wants to do a deal, and we also know the Chinese want to do a deal, ” he said. “I think the critical issue is, will Donald Trump be able to tame the trade hawks?”
Chinese Vice Premier Liu He is set for a scheduled visit to the U.S. next week for high level talks.
In overnight market action on Wall Street, the Dow Jones Industrial Average slipped 22.38 points to close at 24,553.24 while the S&P 500 advanced around 0.14 percent to finish its trading day at 2,642.33. The Nasdaq Composite gained 0.68 percent to close at 7,073.46.
The Japanese yen, widely seen as a safe-haven currency, traded at 109.79 against the dollar after touching highs below 109.5 in the previous session. The Australian dollar was at $0.7101.
The British pound gained 0.37 percent to $1.3112 during Asian hours, as Prime Minister Theresa May attempts to win over U.K. lawmakers with tweaks to her much-maligned Brexit deal before the Mar. 29 deadline. As things stand, the legal default is that the United Kingdom will leave the EU with no agreed deal on trade, laws or travel.
— Reuters contributed to this report.
European stocks close higher amid tech rally; US-China trade in focus
European Markets: FTSE, GDAXI, FCHI, IBEX
The FTSE 100 was the only major bourse to close lower, dragged by Vodafone’s disappointing earnings and a rise in the value of sterling against the dollar.
Europe’s tech sector saw big gains even after U.S. chipmaker Intel posted earnings and guidance that missed analysts’ expectations. Semiconductor firm Siltronic was up more than 5 percent, while competitors STMicro and Infineon were more than 4 and 2 percent higher respectively by the close.
Looking at individual stocks, French automaker Renault climbed near to the top of the Stoxx 600 after Japanese Trade Minister Hiroshige Seko said it should maintain a stable alliance with Nissan. Concerns over their future ties have risen since the arrest of Carlos Ghosn, who led the car alliance. Shares of Renault were up almost 5 percent for the day.
In corporate news, Ericsson reported a 10 percent rise in quarterly sales year-on-year. The firm also trimmed operating losses, which came in lower than market forecasts. Ericsson’s share price jumped 3.1 percent.
U.K. rival Vodafone, on the other hand, fell 5.1 percent after reporting disappointing earnings. The firm said its key measure of revenue slowed in the third quarter, falling 40 basis points from the previous quarter to 0.1 percent. Chief Executive Nick Read also said the firm would “pause” further purchases of Huawei equipment for its core network.
Swedish telecommunications firm Telia, meanwhile, sunk towards the bottom of the European benchmark after it released worse-than-expected results and warned of a “challenging environment” in its home market. The stock fell 4.6 percent.
Elsewhere, Reuters reported on Friday that no one on the supervisory board of Deutsche Bank was pushing for a near-term merger with rival Commerzbank.
Meanwhile, the European Central Bank held interest rates steady on Thursday, and President Mario Draghi sounded the alarm on risks surrounding the euro area. The central bank’s chief warned on a “persistence of uncertainties related to geopolitical factors and the threat of protectionism, vulnerabilities in emerging markets and financial market volatility.”
Draghi’s comments sent the euro lower to a one-month low. However, the currency later broke off from that trend, rising 0.87 percent against the dollar to $1.1404 shortly after the closing bell for stocks.
As for data, German business morale fell for the fifth consecutive month in January and its lowest since February 2016, according to Munich-based Ifo Business Institute.
Commerce Secretary Wilbur Ross told CNBC on Thursday that the U.S. and China are “miles and miles” away from reaching agreement on their trade issues. The two countries are trying to meet a March 1 deadline to reach a deal.
Ross’ comments put pressure on U.S. equities on Thursday, although all major indexes opened higher on Friday morning while trade-sensitive Basic Resources stocks listed in Europe jumped nearly 3 percent on average.
Dow gains for fifth straight week after deal reached to temporarily reopen government
President Donald Trump announced that he reached a continuing resolution deal with Congress to reopen the U.S. government. The temporary deal will fund the government for three weeks until Feb. 15.
The Dow Jones Industrial Average closed higher by 184 points, or 0.8 percent, to 24,737.20. The S&P 500 also rose nearly 1 percent, while the Nasdaq Composite moved higher as constituent Starbucks gained on strong earnings.
The Dow squeaked out a weekly gain of 0.1 percent for the week, its fifth straight positive week as investors continued to buy after the market’s big December drop. That five week win streak was the Dow’s longest since August.
“For the government to be open, for both sides to be talking – has got to be a positive for Wall Street. Everyone agreed there was measurable economic damage each week,” Tom Block, Washington policy strategist at Fundstrat Global Advisors, told CNBC.
Apple, Amazon Alphabet and Facebook led the gains as investors got back into a risk-taking mood with the shutdown ending, buying their favorite technology names. Apple jumped 3.3 percent.
Additionally, two other themes added positive sentiment to Friday’s trading: Federal Reserve monetary policy and trade negotiations with China.
The Wall Street Journal reported that the Fed is closer than expected to ending its balance sheet unwind. The Fed’s decision is a key consideration for investors as they gauge the extent to which the central bank will tighten its monetary policy.
Treasury Secretary Steven Mnuchin projected confidence about the status trade negotiations between the U.S. and China in comments to Reuters. Mnuchin said both sides were “making a lot of progress” in the talks.
“We’ve become conditioned to the D.C. dysfunction. Traders will take profits and prepare themselves for additional stalemates,” Jeff Kilburg, CEO of KKM Financial, told CNBC.
Intel reported fourth quarter earnings which beat Wall Street expectations but missed on revenue. The company’s 2019 forecast showed revenue growth of just 1 percent, with Intel expecting to report first quarter earnings of 87 cents a share – 14 cents below Wall Street expectations. Intel continues to search for a new CEO, seven months after Brian Krzanich was forced out. The stock was down more than 7 percent in trading, but other chip stocks were holding steady.
Starbucks stock gained as the company reported strong sales and earnings growth for its first quarter report. The coffee giant saw revenue climb 9 percent compared to the same period last year.
The government shutdown took on a new phase of seriousness Friday as the FAA halted some flights at New York’s LaGuardia airport on Friday because of a shortage of air traffic control workers. Traders are betting that increasing fallout from the shutdown may force Republicans and Democrats to at least come together for a short-term compromise.
The U.S. Senate, after rejecting two shutdown-ending bills, continues to search for a way to end a government closure entering its 35th day. The shutdown was threatening the economy, as hundreds of thousands of federal workers missed a second paycheck on Friday. Trump said federal workers would receive back pay in four or five days.
Investors are also continuing to monitor concerns surrounding a trade deal with China. Markets came under pressure Thursday after Commerce Secretary Wilbur Ross said that trade negotiations with China were far from complete. “We would like to make a deal but it has to be a deal that will work for both parties,” Ross told CNBC. “We’re miles and miles from getting a resolution.”
Mnuchin’s comments about progress in the trade talks came a few hours after Ross spoke. The Treasury secretary said he is looking forward to speaking with Chinese Vice Premier Liu He next week, when the representative visits the U.S.
— CNBC’s Alexandra Gibbs, Jacob Pramuk and Reuters contributed to this report.