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Asian Stocks Rally On N. Korea Nuclear Hopes, US Payrolls Loom

Asian Stocks Rally On N. Korea Nuclear Hopes, US Payrolls Loom

David Cottle, Analyst


Talking Points:

  • Asian stocks gained through Friday’s session
  • Hopes that a meeting between President Trump and Kim Jong Un could see a nuclear deal cheered investors
  • The Bank of Japan kept policy steady and cautioned that it could stay put for a while yet

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Asian stocks made across-board gains Friday following news that US President Donald Trump had agreed to meet North Korean leader Kim Jong Un, after years of hostile relations and nuclear threats between the two countries.

The meeting was confirmed by the White House and a subsequent tweet from the President said ‘great progress’ was being made but that sanctions against Pyongyang would remain until a deal was reached. This looks so far like a significant milestone in the on-again-off-again history of negotiations about North Korea’s nuclear weapon program.

US stocks offered a modest positive lead too, having risen Thursday after US sanctions on imports of steel and aluminum exempted metal from Canada and Mexico. However, steel producers in Asia underperformed their indexes- notably in Japan and South Korea.

The Nikkei 225 ended up by 0.5% with the ASX in the green by 0.3% and all other bourses higher too. The Japanese Yen lost a little ground as the prospect of those nuclear talks revived risk appetite.

The Bank of Japan left all its monetary settings alone, as had been widely expected. Speaking afterward Governor Kuroda seemed to address recent market suspicions that some end to monetary easing could be coming relatively quickly. He said that although there was now in his view a ‘high chance’ that inflation could reach its 2% target in the 2019 financial year, even that might not mean an immediate stimulus exit, and that such an exit was not currently under discussion.

The Australian Dollar took a modest hit on stronger China consumer prices, presumably on the theory that tighter lending conditions could accompany them, crimping growth. Meanwhile the Japanese Yen slipped against a perkier US Dollar thanks to those nuclear negotiation prospects.

The market is also looking with some hope towards Friday’s key official US labour market statistics. A gain of 205,000 nonfarm jobs is expected for February which would obviously be nicely above the 200,00 figure which the markets often find comforting.

Gold prices slipped back as the US Dollar firmed while crude oil prices caught a modest bid

Still to come Friday, official UK trade and manufacturing numbers along with Canadian unemployment levels for February. All of those are likely to be mere preamble however to the day’s undisputed headliner from the US.

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--- Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.