Stocks in Asia, US futures rise on trade hopes

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.98 percent while Japan's Nikkei index closed down 0.43 percent.

SYDNEY: Stocks in Asia, closing in on their worst year since 2011, rose with U.S. futures on the last day of 2018 after U.S. President Donald Trump reported “big progress” in trade talks with his Chinese counterpart. The yen declined.

The biggest gains were in Hong Kong, while S&P 500 Index and U.K. futures advanced in a reprieve from recent wild swings.

 Trump said in a tweet that negotiations were “moving along very well” toward a comprehensive deal and Chinese state media cited President Xi Jinping as saying he believed both sides wanted “stable progress.” 

Trading was thin with major markets in Japan and China closed and shortened sessions elsewhere. Oil extended gains on the trade optimism.

Australian shares reversed gains as the positive sentiment dampened after a gauge of China’s manufacturing industry missed estimates to decline in December, underscoring concern over the slowing domestic economy.

The manufacturing purchasing managers index fell to 49.4, falling below 50 -- the line between expansion and contraction -- for the first time since 2016.

Global stocks are set for their worst year since 2008 and oil is mired in its steepest quarterly slump since 2014. Plenty of event risks loom next year, from the U.K. vote on the Brexit deal to U.S.-China trade talks and the continuing showdown between President Trump and Congress over the budget. 

The American political landscape is also unsettling investors following departures of senior officials and Trump’s repeated criticism of Federal Reserve Chairman Jerome Powell.

“It’s a positive development,” Tony Morriss, Bank of America Merrill Lynch head of economics and rates strategy, said in a Bloomberg TV interview, referring to the easing trade tensions. 

“What we’d like to see now is the market pricing out any further action from the Fed, the stock markets stabilizing and focusing on some positive headlines on trade. That still leaves an awful lot of uncertainty on the political side” going into 2019, he said.

U.S. stocks halted a two-day rally Friday as thin trading added to already-volatile markets, though the S&P 500 Index held onto its first weekly gain in a month. Treasuries, which rose on Friday, won’t be trading Monday because of the holiday in Japan.

Markets are also closed in South Korea, the Philippines, Taiwan and Thailand.

The U.S. ISM manufacturing PMI is due Friday, Jan. 4.Chinese President Xi Jinping delivers his New Year’s address Monday.Fed Chair Powell is interviewed with predecessors Janet Yellen and Ben Bernanke at the annual meeting of the American Economic Association Friday. Atlanta Fed President Raphael Bostic joins a panel on long-run macroeconomic performance. 

And these are the main moves in markets:

Stocks

Hong Kong’s Hang Seng Index climbed 1.3 percent at the midday close in Hong Kong. Australia’s S&P/ASX 200 Index fell 0.1 percent.S&P 500 futures rose 0.7 percent. The S&P 500 Index fell 0.1 percent Friday.FTSE 100 futures rose 0.4 percent. The MSCI Asia Pacific ex Japan Index added 0.6 percent. 

Currencies

The yen dipped 0.1 percent to 110.43 per dollar.The offshore yuan was at 6.8800 per dollar. The Bloomberg Dollar Spot Index nudged 0.1 percent higher. The euro traded at $1.1431, down 0.1 percent. The British pound was at $1.2686, down 0.1 percent. 

Bonds
The yield on 10-year Treasuries dipped five basis points to 2.72 percent Friday.Australia’s 10-year bond yield fell about four basis points to 2.32 percent. 

Commodities
West Texas Intermediate crude gained 1.2 percent to $45.86 a barrel, extending a 1.6 percent advance Friday.Gold was steady at $1,278.10 an ounce. - Bloomberg