Asian Stocks Talking Points:
- Most indexes were stronger to start the week
- Oil prices remained above last week’s twelve month lows
- Hopes for a better trade backdrop are supporting risk appetite
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Asian stocks traded mixed on Monday, with most higher, as investors looked hopefully to the Argentinian-hosted meeting of the Group of 20 leading industrial economies at the end of the week.
G20 get-togethers have a history of disappointing results. However, there seemed to be some optimism around that the US and China might at least be able to take some heat out of the trade tensions which have dogged much of this year. US President Donald Trump is scheduled to meet his Chinese counterpart Xi Jinping against the backdrop of a trade spat which is now clearly hurting both sides.
The Nikke 225 added 0.7% as its close approached, with the Shanghai Composite flat, the Hang Seng up 1.6% and the Kospi in the green by 1.2%. The ASX 200 in Sydney was the standout faller. It shed 0.7%,with energy names still reeling from crude oil prices’ fall to their lowest level for more than a year on Friday. Prices actually stabilized somewhat as a new week got under way but worries about demand and growth ahead still linger.
The Nikkei is holding above October’s lows, but it looks as though a clear pennant is forming on its daily chart which could argue for a resumption of falls fairly soon.
The US Dollar was broadly firmer although the Euro made gains too on news that the EU and UK had reached a deal on the terms of Brexit. However, the deal will still have to pass the British Parliament and that for the moment, looks unlikely. The New Zealand Dollar fell as retail sales in its home country disappointed, suggesting that record low interest rates will be around for some time to come.
There was little clear market reaction to the electoral defeat of Taiwan’s independence-friendly ruling party in elections at the weekend. Reuters reported that China has already said that it would work with newly elected officials more friendly to it.
Gold prices were flat as markets looked toward the G20 meet, with a stronger Dollar making headway tough.
Monday’s remaining economic data schedule is a little light but there are a few likely points of interest. We’ll get a look at Germany’s IFO sentiment indicator and the British Bankers’ Association will release its latest home-loan numbers. European Central Bank President Mario Draghi will speak in Brussels.
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--- Written by David Cottle, DailyFX Research
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