Asian stocks edge up ahead of US growth data

28-Jul-2018 Intellasia | AFP | 6:02 AM Print This Post

Asian stocks mostly edged higher Friday as investors digested results from American tech titans and waited for the release of US data expected to show a surge in economic growth.

US markets were dragged down Thursday after Facebook warned of weaker growth, sending its shares falling nearly 20 percent and wiping out some $100 billion in market value.

But the stock market gloom was lifted slightly after Amazon delivered better-than-expected profits. The online colossus’ net profit in the past quarter jumped 12-fold to $2.5 billion on the back of gains made from its rapid global expansion.

“Earnings continue to have… (a) hold upon markets with the latest Amazon.com surprise looking to offset some of the pressure brought about by Facebook,” said Jingyi Pan, market strategist at trading group IG.

Tokyo closed up 0.5 percent on a weaker yen, which helps exporters, and Sydney ended 0.9 percent higher after a deal between mining giants BHP and BP lifted the vital mining sector. Seoul put on 0.2 percent.

Shanghai ended 0.3 percent lower while Hong Kong was little changed in late afternoon trade.

With few trading cues in Asia, all eyes turned to the release of US data later Friday which is expected to show an exceptional surge in economic growth in the second quarter that President Donald Trump can use to trumpet the success of his economic agenda.

The unusual result, which economists say could be the strongest in four years, is partly thanks to Trump’s trade warsbut those same disputes threaten to drag growth lower in the coming months and years.

Current forecasts say the second-quarter GDP estimate could show growth was anywhere between four and five percentthe fastest pace since the third quarter of 2014.

There are special factors behind the growth spurt linked to the trade disputes, which include 25 percent US tariffs on $34 billion in Chinese goodswith more on the wayand steep tariffs on steel and aluminium, which provoked China and others to hit back with import duties on US goods.

– Trade troubles –

Trump and European Commission chief Jean-Claude Juncker made an attempt to resolve their festering trade dispute earlier this week, with the US leader pulling back a threat of tariffs on the auto sector after talks in Washington.

Stocks of French and German carmakers rallied on the news Thursday. Europe’s stock markets were steady in opening trade on Friday, with London’s FTSE 100 shares index up 0.2 percent and Frankfurt’s DAX 30 up 0.1 percent.

Asian markets have reacted more cautiously to the EU-US agreement, with analysts noting that the big trade row affecting the regionwith Chinais still rumbling on.

“The reality is the main game remains China and there is no sign yet that the US is likely to back off,” said Greg McKenna, chief market strategist at AxiTrader.

With many believing the EU had given ground to the US in their dispute, Trump may take it as a sign “his belligerent approach is the right one”, added McKenna.

In currency markets, the euro gained back ground following falls Thursday after the European Central Bank left interest rates unchanged at a regular meeting and said its planned exit from massive stimulus measures was on track.

Oil prices were largely flat in Asian trade, as investors weighed a decline in US crude inventories and a Saudi supply disruption against increased production from cartel OPEC and Russia.

– Key figures at 0730 GMT –

TokyoNikkei 225: UP 0.5 percent at 22,712.75 (close)

Hong KongHang Seng: UP 0.03 percent at 28,788.56

ShanghaiComposite: DOWN 0.3 percent at 2,873.59 (close)

euro/dollar: UP at $1.1656 from $1.1640

Pound/dollar: UP at $1.3116 from $$1.3101

Dollar/yen: DOWN at 110.98 from 111.24 yen

OilBrent Crude: DOWN seven cents at $74.47 a barrel

OilWest Texas Intermediate: DOWN 13 cents at $69.48 a barrel

New YorkDow: UP 0.4 percent to 25,527.07 (close)

New YorkS&P 500: DOWN 0.3 percent to 2,837.44 (close)

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Category: FinanceAsia

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