Asian equities climbed with U.S. and European stock futures and the offshore yuan following positive signs on the outlook for U.S.-China trade talks.
Equity benchmarks rose in Japan, Hong Kong and South Korea, and the Aussie ticked higher. News that Canada granted bail to the chief financial officer of China’s Huawei Technologies Co. — arrested at the behest of the U.S. — helped bolster sentiment. President Donald Trump added to the positive mood, telling Reuters he’d consider intervening in the case if it helped get a China deal, and would meet with President Xi Jinping if needed to advance trade talks. India’s bonds rallied after an ally of Prime Minister Narendra Modi was named as new central bank chief.
Elsewhere, oil traded above $52 a barrel in New York. Overnight, the S&P 500 Index closed flat after surrendering an early rally. Carmakers in the U.S. rose as China signaled it may cut tariffs on auto imports. The pound continues to struggle thanks to Brexit woes. A leadership challenge to U.K. Prime Minister Theresa May could be close, but the BBC reported the threshold of votes by Conservative members of parliament hadn’t been reached. Elsewhere, Treasuries were little changed after Trump warned the Federal Reserve against hiking interest rates this month.
Investors are also keeping watch on the risk of a shutdown of parts of the federal U.S. government, with Trump at odds with Democratic leaders in Congress over funding for a border wall with Mexico. But trade news is at the forefront, after the arrest of Huawei CFO Meng Wanzhou earlier this month spurred condemnation in China.
“Trade tensions will probably ease somewhat in 2019,” Didier Borowski, head of macroeconomic research at Amundi Asset Management, told Bloomberg TV in Singapore. “But we have to keep in mind from a strategical standpoint that trade tensions are here to stay and they will probably be much more elevated than they were over the last few years.”
Indian bonds surged after the country appointed Shaktikanta Das as its new central bank chief who is seen as more dovish on monetary policy. Urjit Patel had abruptly quit a day prior following disagreements with the government.
In France, the spread between government bond yields and those in Germany rose to the highest since the 2017 election. France’s Prime Minister Edouard Philippe confirmed that President Emmanuel Macron’s efforts to meet protester demands will have an impact on the country’s deficit, with the situation causing a new headache for the EU in its talks over the Italian budget.
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Here are some key events on the calendar this week:
U.S. inflation data is due Wednesday. The European Central Bank is set to end asset purchases at its final policy meeting of 2018 on Thursday.China industrial production, retail sales data for November is due Friday.
And these are the main moves in markets:
The MSCI Asia Pacific Index was up 1.4 percent as of 1:48 p.m. in Tokyo.Japan’s Topix index added 1.9 percent. Hong Kong’s Hang Seng rose 1.5 percent.Shanghai Composite gained 0.2 percent. Australia’s S&P/ASX 200 Index advanced 1.3 percent. Futures on the S&P 500 rose 0.5 percent. The S&P 500 was little changed at the close of trading in New York.Futures on the Euro Stoxx 50 added 0.4 percent.
The yen held at 113.49 per dollar. The offshore yuan added 0.3 percent to 6.8848 per dollar. The euro was little changed at $1.1325.The British pound was at $1.2507 after falling 0.6 percent Tuesday.
The yield on 10-year Treasuries held at 2.88 percent.Australia’s 10-year bond yield was stable at 2.45 percent.
West Texas Intermediate crude rose 1.3 percent to $52.31 a barrel.Gold was little changed at $1,244.26 an ounce.