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A phone call and hint of trade deal send Asia shares shooting up

A man looks at electronic boards showing Japan's Nikkei average (left) and Dow Jones Industrial Average outside a brokerage in Tokyo, on Oct 12, 2018.

[HONG KONG] It all started with a phone call. Then it only got better.

Friday (Nov 1) began in the green for Asian stocks, thanks to news the leaders of the world’s two largest economies talked, with US President Donald Trump saying his Chinese counterpart wanted to make a deal to end an escalating trade war. Then the report that sent shares shooting up came out: Trump has asked US officials to begin drafting potential agreement terms, according to people familiar with the matter.

The MSCI Asia Pacific Index surged as much as 2.3 per cent, heading for its biggest jump in more than two years. And as the week comes to an end, there’s no shortage of superlatives to describe this rally: best week since March 2016, first gain in six weeks and higher trading volume across the board.

Hong Kong shares led the surge on Friday, with the Hang Seng Index soaring as much as 4 per cent. The Shanghai Composite Index gained for a fourth day, up 2.4 per cent, following this week’s hints from the nation’s leadership that additional stimulus measures may come soon.

Japan’s Topix index closed up 1.6 per cent while the Nikkei rose 2.6 per cent.

South Korea’s Kospi index surged 3.5 per cent while Singapore’s Straits Times Index jumped 1.5 per cent.

Also helping was a report that the US has agreed to let eight countries to keep buying Iranian oil after it reimposes sanctions on the Opec producer on Nov 5, a senior administration official said. Those include Japan, India and South Korea.

Friday was a day that even Apple Inc’s lacklustre earnings results couldn’t spoil. While some of the company’s suppliers fell in early trading, tech companies in the MSCI Asia Pacific Index topped all other sectors Friday, rising as much as 3.5 per cent.

There was also other good news from the region.

Chinese President Xi Jinping held a forum with officials from some major domestic private companies and pledged a better environment for them. With promises of tax cuts and financial support for non-state owned firms, the ChiNext Index rallied as much 4.3 per cent, dwarfing the Shanghai Composite’s gain.

South Korea’s Kospi index jumped the most in almost seven years as earnings from companies such as Daelim Industries and GS Retail beat expectations, a decline in the price of crude sent petrochemical makers soaring, and China’s stimulus plan sent metal-related stocks higher.

Japan telcos rebounded after KDDI said it wouldn’t follow NTT Docomo’s mobile plan price cuts and confirmed reports it would tie-up with market newcomer Rakuten. The US-China trade progress also lifted sentiment.


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