The Financial Express

Asian shares recoup early losses, buoyed by Chinese trade data

| Updated: October 13, 2020 17:54:02

Men wearing face masks are seen inside the Shanghai Stock Exchange building, as the country is hit by a novel coronavirus outbreak, at the Pudong financial district in Shanghai, China, February 28, 2020 — Reuters/Files Men wearing face masks are seen inside the Shanghai Stock Exchange building, as the country is hit by a novel coronavirus outbreak, at the Pudong financial district in Shanghai, China, February 28, 2020 — Reuters/Files

Asian stock markets steadied on Tuesday after Chinese trade data underscored the country’s economic recovery, while fresh optimism about US stimulus is likely to keep global investor sentiment elevated.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was trading up 0.12 per cent by early afternoon after falling into negative territory early on Tuesday.

The Shanghai Composite .SSEC, which initially slipped 0.5 per cent - trimming recent gains since a week-long public holiday last week - recovered some ground in the afternoon session to be down 0.05per cent.

China's blue chip index CSI300 .CSI300 was up 0.3 per cent, after dipping 0.3 per cent early in the day.

Sentiment improved after Chinese customs data showed exports rose 9.9 per cent in September from a year earlier, broadly in line with analysts’ expectations and up from a 9.5 per cent  increase in August. Imports jumped 13.2 per cent compared to a 2.1 per cent drop in August.

“The near‑term outlook for Chinese exports is supported by the continued global recovery,” said Commonwealth Bank economist Kevin Xie.

“Growth in Chinese exports may start to ease because the path of the future recovery is likely to be gradual,” he added.

In Japan, the Nikkei index .N225 gained 0.1 per cent to hit 23,590. Oil prices also firmed.

Trading on Hong Kong's Hang Seng index .HSI was canceled as the city faced a typhoon warning.

S&P 500 futures ESc1 pared losses in afternoon trade and last sat 0.2 per cent lower. Euro STOXX 50 futures STXEc1 were steady and FTSE futures FFIc1 rose 0.2 per cent.

During the session, it emerged that Johnson & Johnson JNJ.N temporarily paused its Covid-19 vaccine candidate clinical trials due to an unexplained illness in a study participant.

Despite the volatility across the region, Surich Asset Management founder Simon Yuen said he was confident Asian stock markets would retain positive fundamentals following the US election on Nov 3.

“We expect Asian equities should outperform the global equity market in next two to three years because if (Joe) Biden is elected U.S. shall have an easier relationship with China,” Yuen said.

“On the other hand, if (Donald) Trump is elected, China will promote demand in terms of consumer spending in order to increase their dominance over the world.”

Australia's benchmark S&P/ASX 200 .ASXJO was a bright spot, up 1 per cent on firmer bank stocks, despite a selldown in major coal names after reports China could look to ban Australian imports of the commodity.

On Wall Street, the Nasdaq Composite .IXIC on Monday staged its biggest one-day rally in a month, jumping 2.56 per cent . The Dow Jones Industrial Average .DJI rose 0.88 per cent  and the S&P 500 .SPX gained 1.64 per cent.

“Markets are really thinking about what will happen in the U.S next year and the size of the next stimulus package,” said JPMorgan Asset Management global market strategist Kerry Craig.

The US dollar was pinned near a three-week low and gold, another safe-haven asset, stayed below a three-week high, slapped by investor demand for risk.

The dollar index =USD gained 0.1 per cent, reversing an earlier fall in the US session.

Investors await US bank results with JPMorgan JPM.N and Citigroup C.N kicking off third-quarter earnings season on Tuesday. Goldman Sachs GS.N, Bank of America BAC.N and Wells Fargo WFC.N and Morgan Stanley MS.N report later in the week.

Bets that more US stimulus was in the offing came despite signs that talks in Washington had stalled again, leading the Trump administration to call on Congress to pass a less ambitious coronavirus relief bill.

Beijing’s tensions with Washington are also in view after the White House moved forward with three sales of advanced weaponry to Taiwan, sources familiar with the situation said on Monday.

Investors are also closely watching the global resurgence in coronavirus cases after British Prime Minister Boris Johnson on Monday announced a new system of restrictions on parts of England. Lawmakers will vote on the move on Tuesday.

Gold XAU= was 0.31 per cent weaker at $1,915.76 an ounce.

In Asian trade, Brent crude LCOc1 was 0.3 per cent higher at $41.86 a barrel. US West Texas Intermediate CLc1 climbed by the same amount to reach $39.55.

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