Asia: Markets enjoy gains as focus turns back to trade talks

[HONG KONG] Asian markets edged up on Friday as investors turn their attention to the China-US trade talks, while keeping an eye on the Gulf region after last week's air strikes on Saudi oil facilities fanned geopolitical tensions.

With a delegation from China in the US to prepare for higher-level negotiations next month, there are hopes the economic powerhouses can find a solution to their tariffs row that has dragged on the global economy for a year.

Stock markets have enjoyed a broadly positive September thanks to hopes for the talks, with both sides appearing to offer olive branches and sounding less confrontational than they did in July and August.

A shift by central banks to easier monetary policies - or a desire to do so - is providing some much-needed support to equities, though there was some disappointment in the Federal Reserve's lack of forward guidance this week for further interest rate cuts.

Still, there is an expectation that more measures were likely on the way, with Kate Warne, investment strategist at Edward Jones, telling Bloomberg TV: "There's a lot more monetary stimulus coming into the system."

In early trade Hong Kong rose 0.3 per cent after a four-day sell-off, though investors are on alert for further protests in the city following clashes between pro-democracy demonstrators and police last weekend. Shanghai also added 0.3 per cent and Tokyo went into the break 0.4 per cent higher.

'DANGEROUS GAME'

Sydney gained 0.7 per cent as investors grow optimistic the Australian central bank will cut interest rates again at its next policy meeting, while Seoul and Taipei added 0.2 per cent. Singapore edged up 0.1 per cent and Wellington put on 0.4 per cent.

However, traders are on edge in case of further attacks on Saudi Arabia at the weekend following the devastating strikes that crippled two of its biggest oil plants on Saturday and sent the price of crude soaring.

Both main contracts stabilised this week after the initial shock but there are worries of a possible conflict after the US and Saudi Arabia pointed the finger at Iran and said they were considering their response.

Adding to concerns, Iran's Foreign Minister Mohammad Javad Zarif warned on Thursday that any military strike on the country could lead to "all-out war".

"It is hard to see oil markets wanting to sell crude heavily ahead of the weekend and the event risk that entails," said Jeffrey Halley, senior markets analyst at Oanda.

"In fact, that would be a very dangerous game as the threat of more attacks from Iran or its proxies have, if anything, increased, not decreased given the enfeebled global response this week."

AFP