Asian Market Talking Points:
- Stocks put in a mixed performance
- Donald Trump’s Japan visit reminded investors that China is far from alone in the US trade in-tray
- The Euro held up well despite tumultuous European Parliamentary elections
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Asian stock markets started the week in mixed fashion with focus once again on US trade relations with its major partners.
China for once took a back seat with President Donald Trump in Japan for a state visit. Asia’s second-largest economy is another persistent trade-surplus nation on the White House’s sights. So far the visit seems to have been long on set-piece bilateral bonhomie with Trump suggesting that Tokyo and Washington were getting close to a deal which could address the US/Japan trade deficit which ran at $56.8 billion in 2018.
Still, the US has threatened tariffs against Japanese car makers and, as with China, there seems to be little expectation that a substantive pact will be inked anytime soon. Trump did say on Monday that he expects a deal with both China and Japan ‘sometime in the future.’
Mainboards in Japan and Shanghai were both higher as their Monday closes approached with stocks in Australia, South Korea and Hong Kong all modestly lower.
European Parliamentary elections offered the prospect of a more fragmented Parliament. Nationalists made strong gains in places while centrists held on better than they’d been expected to in others. Britain’s one-issue Brexit party had a stellar crop of seats, with punishment handed out by voters to both the ruling Conservatives and biggest opposition party Labour.
Still, the Euro held up pretty well despite it all. For sure EUR/USD remains well within the long downtrend which has marked the retreat from October 2018’s highs.
But it is notable that even given all of the current uncertainty around Europe, last April’s lows are still holding the bulls in check.
The two major Western forex centers of New York and London will both be out of the game Monday for holidays, which may well explain the relative market calm.
Bitcoin was less calm, rising to its highs for 2019 and dragging up many other crypto units with it.
This week doesn’t offer a huge amount in the way of scheduled economic data likely to move markets which will probably keep investor focus on the twin themes of trade and European politics. Growth numbers are due from both the US and Canada, as is official Purchasing Managers Index data from China. All of these have the potential to see risk appetite and markets move, but they are probably the only three releases which do.
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--- Written by David Cottle, DailyFX Research
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