Asia: Markets rally as blockbuster quarter draws to close

[HONG KONG] Asian markets rose on Friday, putting them on course to end the week on a positive note with investors looking past a downgrade of US growth to focus on the next round of top-level China-US trade talks.

While the past five days have been dogged by fears over the outlook for the global economy, equities from Sydney to Wall Street have enjoyed a stellar start to 2019 fuelled mostly by hopes of a tariffs deal and the prospect of lower borrowing costs.

A slight pick-up in the key US 10-year Treasury yield provided some sense of stability, though dealers remain on edge over the future, with data showing the US economy grew at a much slower pace than initially thought in October-December.

Attention is on Beijing where top Chinese and US negotiators are taking part in their latest batch of talks aimed at ending their long-running trade row that has dragged on the world economy.

White House economic adviser Larry Kudlow said the negotiations were not "time dependent" and could be extended, adding they could take weeks or months to get a final deal.

There has been little by way of solid news on the negotiations but observers have remained upbeat, with China having made a number of concessions in key issues including intellectual property, while Donald Trump has often said he is confident.

"Risk assets are being supported right now, in my view, by a dovish Fed, a China stabilisation and better sentiment around geopolitical risks," Frances Donald at Manulife Asset Management told Bloomberg news.

"That probably gives this rally a little bit more juice."

'REMAIN LIMBO'

In morning trade Shanghai surged 1.8 per cent, Hong Kong added 0.7 per cent and Tokyo headed into the morning one per cent higher.

Sydney, Seoul and Singapore each added 0.3 per cent, while Wellington put on 0.6 per cent. Taipei and Manila were also sharply higher.

On currency markets the upbeat mood helped the dollar rise against the safe-haven yen, while the pound was unable to break out of a narrow range as the Brexit saga rumbles on.

Prime Minister Theresa May is expected to try for a third time to push her EU divorce bill through parliament after MPs voted down a number of other options on how to leave.

However, Oanda senior market analyst Alfonso Esparza warned "the third time is not likely to be the charm" owing to continued opposition from key lawmakers.

"Failure for the third time could push the United Kingdom into a remain limbo, where a credible exit could not be engineered before the European parliament's elections in which Britain would have to participate."

AFP