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Stocks Up As China Strikes More Conciliatory Trade Tone, Dollar Firm

Stocks Up As China Strikes More Conciliatory Trade Tone, Dollar Firm

David Cottle, Analyst

APAC Stocks Talking Points:

  • All major indexes were in the green Friday, some by quite a long way
  • A lack of tariff retaliation from China boosted sentiment
  • The US Dollar made initial gains but has retraced some

What do retail foreign exchange traders make of your favorite currency’s chances right now at the DailyFX Sentiment Page

Asian stocks look set to round out the week with broad Friday gains. The latest twist in the US-China trade war saga seems a positive one with Beijing having hinted the day before that it will not immediately match the latest round of US tariffs.

The sinister inversion of the US yield curve endures, however. This possible harbinger of recession has understandably kept a lid on investor exuberance. Still, the Nikkei 225 was up 1.4% with robot-builder Fanic enjoying a buoyant session. The Shanghai composite added 0.2% while the Hang Seng in Hong Kong was 0.7% to the good. That was despite news of the arrest of some protest leaders in the troubled territory. South Korea’s Kospi was up 1.9% after the Bank of Korea left benchmark lending rates alone. The market had expected this after July’s cut. Chip -maker Hynix led the gainers.

Meanwhile Sydney’s ASX 200 gained a chunky 1.5%. The big banks made gains, with Westpac out in front, as more risk averse plays such as gold miners wilted. Shipbuilder Austral’s results found favor with investors while machine-learning data name Appen bounced back smartly from this week’s result-driven slide.

Australian Dollar Remains Very Heavy

The US Dollar made some initial gains on the counter-cyclical Japanese Yen as risk appetite seemed to revive, but it had retraced much of these by the Asia Pacific afternoon. Likewise the Australian Dollar faded a little too, apparently continuing a theme of the week which has seen the foreign exchange market perhaps less enthusiastic about trade progress than stocks seem to be.

The Australian Dollar faces an interest-rate decision from the Reserve Bank of Australia next week, at which no change to the record-low Official Cash Rate is expected, even though the market remains certain that it is headed lower over time.

Growth data from the second quarter will also be released, with signals so far as to economic performance decidedly mixed.

AUDUSD remains quite immune on the daily chart to improvements in risk appetite elsewhere.

Australian Dollar Vs US Dollar, Daily CHart

August’s 11-year low remains close to the market, with the latest downtrend apparently only becoming more entrenched as next week’s packed calendar approaches.

Asia Pacific Stocks Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- 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.

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