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|04 April, 2019

Thursday outlook: Asian stocks approach eight-month highs

Signs of easing trade tensions between the United States and China pushed equities higher

An investor checks stock information on her mobile phone in front of a board at a brokerage office in Beijing, China July 6, 2018.

An investor checks stock information on her mobile phone in front of a board at a brokerage office in Beijing, China July 6, 2018.

REUTERS/Jason Lee
  • Asian shares track Wall Street higher
  • Brent oil prices hold near $70 a barrel
  • Dubai’s index adds 1.1 percent, boosted by Emirates NBD
  • Dollar drops, gold gains

Global markets

Asian shares hovered near eight-month highs early on Thursday, tracking a rise on Wall Street overnight, as news on progress in talks between the United States and China boosted investor sentiment.

“Risk sentiment will likely be mixed on Thursday as investors digest developments on the trade front amid disappointing U.S. economic numbers,” Nicholas Mapa, a Manila-based economist for Dutch bank ING, told Reuters.

“The focus will remain on the ongoing U.S.-China trade negotiations and the U.S. labour data on Friday,” Mapa added.

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On Wednesday, the Financial Times reported the United States and China were closer to reaching a final trade agreement.

Chinese shares started firm with the blue-chip index up 0.9 percent. Japan’s Nikkei nudged 0.2 percent higher to stay near a recent one-month top.

Overnight on Wall Street, the Dow rose 0.15 percent, while the S&P 500 gained 0.21 percent and the Nasdaq 0.6 percent.

Oil prices

Brent oil prices held near the $70 per barrel in early trading on Thursday.

Brent futures were up 5 cents at $69.36 a barrel by 0224 GMT. On Wednesday, Brent dipped 6 cents, after touching $69.96, the highest since November 12, when it last traded above $70.

U.S. West Texas Intermediate (WTI) crude fell 3 cents to $62.43 a barrel. The one-month futures contract dropped 12 cents in the previous session after briefly hitting $62.99, also the highest since November.

“There is a clear bias to the upside with the supply restrictions,” Michael McCarthy, chief market strategist at CMC Markets in Sydney told Reuters, pointing to supply cuts by OPEC and others, along with sanctions on Iran.

“And there’s a much better than expected demand picture after the recent China and U.S. PMI numbers, along with a potential kicker from any U.S.-China trade agreement,” he said.

A Reuters report said that the Caixin/Markit services purchasing managers’ index (PMI) tracking private sector activity in China rose to 54.4 on Wednesday, the highest since January 2018 and up from February’s 51.1, a fourth-month low.  A rating above 50 signifies economic growth, and below 50 signifies contraction.

Middle East markets

Dubai’s index gained 1.1 percent on Wednesday with Emirates NBD rising 6.1 percent. The bank will buy Turkey’s Denizbank for 15.48 billion lira ($2.8 billion) after reaching a new agreement with Russia's state-owned Sberbank.

Abu Dhabi's index edged down 0.1 percent, with Emirates Telecommunications Group sliding 0.5 percent.

The Saudi index added 0.6 percent, with market heavyweight Saudi Basic Industries Corp adding 1.1 percent.

In Qatar, the index slid 0.4 percent as Qatar National Bank, the largest bank by assets in the Middle East and Africa, declined 1 percent and heavyweight Industries Qatar lost 0.8 percent.

Egypt’s blue-chip index EGX30 edged up 0.2 percent, Kuwait’s premier market index added 1.2 percent, while Oman’s index dropped 0.5 percent and Bahrain’s index added 1.1 percent.

Currencies

The dollar dropped on Thursday after data showed U.S. services sector activity hit a more than 19-month low in March and private payrolls grew less than expected. The dollar index, which measures the greenback against a basket of six major currencies, fell 0.26 percent.

Precious metals

Gold gained on a weaker dollar.

Spot gold rose 0.2 percent to $1,291.89 per ounce as of 0332 GMT while U.S. gold futures firmed 0.1 percent at $1,296.90 an ounce.

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(gerard.aoun@refinitiv.com)


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