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Stocks Inch Up On Local Tailwinds Despite New US-China Trade Jitters

Stocks Inch Up On Local Tailwinds Despite New US-China Trade Jitters

David Cottle, Analyst
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Asian Stocks Talking Points:

  • Local indexes managed to rise above some trenchant rhetoric from both sides of the US-China trade story
  • Japanese inflation still shows no signs of life
  • The US Dollar lost some of its post-Fed gains

Find out what retail foreign exchange investors make of your favorite currency’s chances right now at the DailyFX Sentiment Page

Asia Pacific stock indexes managed to edge higher on Friday despite some new clouds glowering over US China trade relations.

The South China Morning Post reported that US Presidential Advisor Michael Pillsbury warned that the US is ready to escalate trade war if a deal isn’t struck shortly. Such rhetoric was not confined to the US side though. The editor-in-chief of Chinese state media Global Times Tweeted that China was not as anxious to reach a deal as the US thought.”

These stories come as both parties are expected to meet for high level talks in the weeks ahead which investors hope can see an end to tit-for-tat tariffs which have seen trade barriers raised on goods worth hundreds of billions of Dollars.

Individual Stock Stories Boost Indexes

Still, regional stock markets managed to look beyond trade, and the US ‘quadruple witching’ which looms on Friday as quarterly futures and options on indexers and stocks expire on the same day, often spurring volatility. The People’s Bank of China published its new Loan Prime Rates on Friday with the one-year rate trimmed to 4.2%, from 4.25% last month.

The Hong Kong-listed shares of Chinese banks rose, but the overall Hang Seng was only in the green by a whisker. Shanghai shares rose 0.1%. The Nikkei 225 was up 0.2% helped by big gains for index heavyweight Softbank.

Japanese Inflation Decelerates Again

Japan’s core consumer inflation slowed to a new two-year low in August, according to official figures. It’s 0.5% gain was the weakest since July 2017. The Bank of Japan has said that it will review matters in October and, with inflation stubbornly low, it must be likely that it will consider further stimulus measures.

Meanwhile, over in Australia, the ASX200 posted one of the more impressive regional gains. It was up 0.5% as its Friday close loomed helped by strong gains for e-commerce name Redbubble. Its shares outperformed on that sought-after blessing, a price-target upgrade from Goldman Sachs.

The Aussie benchmark is now flirting with the top of its current trading range. A weekly close above it would be a bullish psychological support but seems in the balance as the day’s trade winds down.

Australian Dollar Vs US Dollar, Daily Chart

The well-respected and entrenched uptrend from the lows of late August looks solid enough though.

The US Dollar came under a little pressure as central banks in Switzerland, the UK and Japan have all failed to follow the Federal Reserve in cutting interest rates since it did so on Wednesday. The British Pound made gains as European Commission President Jean-Claude Junker said he thought a Brexit deal could be reached before the October 31 deadline.

Asian 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.