Asian markets up on early news of trade deal and Brexit optimism

Tokyo, Hong Kong, Shanghai

STOCKS rose around the world as news of the partial trade deal between the US and China reverberated across global markets.

Equities marched upwards from Beijing to Paris as two key risks for investors - additional trade duties and political deadlock in Britain - receded for now. The Stoxx Europe 600 Index vaulted above its record-high close, while in the UK the FTSE 250 index soared as much as 5.4 per cent, the most in nine years. Shares in all major Asia markets climbed, though gains in US equity futures were more muted.

Tokyo soared 2.6 per cent, Hong Kong piled on more than 2 per cent, Shanghai clocked up 1.8 per cent, Seoul surged 1.5 per cent and Sydney rose 0.5 per cent. There were also gains in Mumbai, Singapore, Taipei, Manila and Jakarta.

China's yuan eased, after punching through 7 per dollar with the biggest advance in a year on Thursday, when Bloomberg first reported that a trade deal had been agreed in principle. Treasury 10-year notes steadied after yesterday's tumble. The yen retreated.

"The global recovery (fear of missing out) trade of the last two months got a turbocharged boost, naturally," said OANDA's Jeffrey Halley.

Meanwhile, Boris Johnson won an emphatic election victory that redraws the political map of Britain and gives the Prime Minister the mandate he needs to pull the UK out of the European Union in less than two months.

"Markets were getting more... nervous about both the UK elections" and the US tariffs looming Sunday, but now "relief is being exhibited", Mitul Kotecha, senior emerging markets strategist at TD Securities in Singapore, said on Bloomberg TV.

"It's turning into a merry Christmas as we're going into the end of the year." However, while the mood heading into Christmas is of optimism, Tai Hui at JP Morgan Asset Management pointed out there was still a long way to go on both issues.

"The UK government will need to finalise the details on Brexit and start a marathon of trade negotiation with the EU," he said. "This is expected to be complicated and time-consuming, while new uncertainties could emerge for the business sector."

And on the China-US trade deal, "our view has always been that the two sides would agree on phase one, but these represent some of the lowest-hanging fruits in the negotiation".

"The future stages of negotiation is going to be much more challenging when it starts to involve China's industrial policy and technological development," he added. BLOOMBERG, AFP