Asian Stocks Talking Points:
- Stocks were higher Monday, with the Nikkei 225 surging
- 48-hour trade talks between the US and China started in Beijing
- The US Dollar was weaker as investors rethought likely interest rate policy, again
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Asia Pacific stocks made broad gains Monday with trade hopes once again very much to the fore. These have been dashed before of course but, with vice-ministerial levels talks scheduled between the US and China in Beijing will take place over the next 48 hours, markets seem prepared to give the latest round the benefit of their doubts.
The Nikkei 225 surged 2.9%, its automakers especially strong. It was the clear leader however although all other major bourses were in the green. The Shanghai Composite was up by 0.6%. The Hang Seng added 1%, as did Sydney’s ASX 200. The Kospi was up by 1.6%.
The US Dollar weakened further. Federal Reserve Chair Jerome Powell said on Friday that central bank was not on a preset path of interest rate increases, and that it will be sensitive to the risks currently priced in. Despite last weekend’s very strong US employment data, rate futures markets have shortened the odds against interest rate cuts ahead.
Powell is due to speak again this week, on Friday, to the Economics Club of Washington.
Gold prices made gains on that weaker US Dollar. The oldest haven asset of all is now at highs not seen since mid-June last year on its daily chart.
The spot price is also attempting to break out of a broad uptrend channel which had previously contained trade since November 18. Crude oil prices got a lift from revived traded hopes and also from supply cuts by major producers which were agreed last year.
Still left on Monday’s data slate are retail sales data for the Eurozone. Germany’s Purchasing Managers Index for the construction sector is coming up too, along with factory-orders figures. The composite PMI for the US from the Institute for Supply Management is also due.
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--- Written by David Cottle, DailyFX Research
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