Asian markets build on trade optimism, pound faces pressure

Hong Kong (AFP) –


Asian markets enjoyed more gains Thursday as investors are cheered by the more conciliatory noises from China and the US on trade, while uncertainty over Brexit continued to pressure the pound.

While the tariffs row between Beijing and Washington is far from being resolved, there is a lot more optimism on trading floors this week that the world's top two economies can make headway in talks over the next three months.

The latest buying queues came from a report that Beijing is considering replacing its "Made in China 2025" programme that aims to boost its technology sector, a key point in anger for Washington.

The Wall Street Journal said authorities were looking at putting back the scheme's timetable by a decade to concentrate on improving standards.

That followed news China had agreed to resume importing soybeans -- a major boost for US farmers -- as well as remove a levy on US autos imposed earlier this year in response to Donald Trump's initial tariffs.

China's technology concession "is far more relevant than China agreeing to restart purchases of American soybeans, or even reducing the tariff on US car imports", said National Australia Bank strategist Ray Attrill.

Canada's release on bail of a top executive at Chinese telecoms giant Huawei, whose arrest had sparked fears of an adverse impact on the trade talks, also soothed worries.

- Dollar dips -

Asian markets extended Wednesday's gains, which helped reverse some of the huge losses suffered last week.

Tokyo ended the morning one percent higher, while Hong Kong and Shanghai both surged 1.3 percent.

Sydney climbed 0.4 percent and Seoul was 0.5 percent higher, while Singapore and Taipei each rose 0.3 percent. Wellington, Manila and Jakarta were also well in positive territory.

The upbeat mood provided another lift to higher-yielding, riskier currencies, with the South African rand more than one percent up, while the Chinese yuan bounced 0.3 percent.

Sterling is stuck around 20-month lows but held up against the dollar after gaining more than one percent Wednesday in reaction to Prime Minister Theresa May winning a no-confidence vote by her ruling Conservative party.

Investors welcomed news she had seen off the challenge, which secures her leadership for the next 12 months, but she had to concede to stepping aside before the 2022 election, while the vote showed that more than a third of her own colleagues wanted her gone now.

It also highlights the uphill struggle she faces in pushing through a controversial Brexit deal that has been slammed from all sides. She had already called off a vote Tuesday on the agreement, knowing it would fail.

May is now hoping EU leaders will provide some concessions to help her pass the legislation but with little hope of concessions from Brussels, the chances Britain will leave the bloc with no deal are growing, which analysts have said could be economically calamitous.

"The result neither guaranteed the pound's stability nor paves the way for a successful Brexit deal," said Masakazu Satou, senior analyst at Gaiame Online. "Pound-selling sentiment could revive at any time."

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: UP 1.0 percent at 21,817.62 (break)

Hong Kong - Hang Seng: UP 1.3 percent at 26,536.08

Shanghai - Composite: UP 1.3 percent at 2,636.86

Pound/dollar: DOWN at $1.2618 from $1.2629 at 2130 GMT

Euro/dollar: UP at $1.1368 from $1.1365

Dollar/yen: UP at 113.40 yen from 113.22

Oil - West Texas Intermediate UP 26 cents at $51.41 per barrel

Oil - Brent Crude: UP 34 cents at $60.49 per barrel

New York - Dow Jones: UP 0.6 percent at 24,527.27 (close)

London - FTSE 100: UP 1.1 percent at 6,880.19 (close)