Chinese recovery pushes up Asian equities By Reuters

By Andrew Galbraith

SHANGHAI (Reuters) – Asian stocks caught up on their expected losses on Friday, buoyed by solid gains in China, as gains in trade talks with the US eased worries over the worsening global economic outlook.

The MSCI's broadest index of Asia Pacific shares out of Japan was up 0.3% in the middle of the afternoon, after spending the day getting in and out negative territory.

Better-performing bettors CMC Markets expects an uneven performance in Europe, with a 0.1% rise in London, a 0.1% drop for Frankfurt and a 0.2% drop for Paris.

Chinese equities rebounded in the afternoon after a tentative start, with optimism sparked by trade negotiations being reaffirmed, pushing up the prime-rate index by 2.2% . For the week, it gained 5.4%, its strongest week since November 2015.

Chinese stocks had already hesitated earlier in the face of investor concern over slowing domestic growth and indications that the Chinese authorities would use a reduction in the benchmark lending rate. as a last resort to revive the economy.

China's new home price growth reached its lowest level in nine months in January as general economic weakness weighed more and more heavily on real estate and consumer confidence.

Japan ended down 0.2% after data show that core consumer inflation has slightly accelerated in January, but remained far from the 2% target of the central bank, highlighting the fragility of the economic recovery in the country.

Australian equities gained 0.5% and the Seoul Kospi reversed its previous losses to 0.1%.

Rob Carnell, chief economist and head of research for the Asia-Pacific region at ING, said the combination of trade talks and the Federal Reserve's cautiousness in the face of further rate hikes had helped support more assets. risky, including stocks.

But with a more dovish Fed and a kind of already integrated trade agreement, new business developments "have not really had an impact similar to the one they would have had in the markets there. a week, a few weeks or a few months ago, "he said. I said.

Nevertheless, investors continue to monitor the high-level negotiations between US and Chinese negotiators in Washington just over a week before the expiration of the US deadline for an agreement, which would lead to a increase in customs duties.

Reuters reported on Wednesday that the two sides are drafting the text of six memoranda of understanding on China's proposed reforms, which have helped improve investor sentiment.

Chinese Vice Premier Liu He will meet with President Donald Trump on Friday, the White House announced.

In the midst of trade talks, new data from the United States showed Thursday that its economic outlook is also changing.

The US Commerce Department said Thursday that domestic non-defense capital goods orders, excluding aircraft, represented a closely guarded surrogate for corporate spending plans, had dropped 0.7% .

In addition, the factories sector in the United States in the mid-coastal US entered February contraction for the first time since May 2016, according to data from the Federal Reserve of Philadelphia.

"Although the global manufacturing sector is weak, the services activity seems more positive, but it is hard to see that the manufacturing sector and services diverge for a long time," said ANZ analysts in a note. in the morning.

"The manufacturing sector has strong multiplier effects that imply downside risks for the service sector, especially in Europe.The trade uncertainty, which weighs on the manufacturing sector, must be resolved."

The benchmark 's return declined slightly to 2.6824% on Friday, compared to a US closing of 2.688% on Thursday, due to investor optimism about the progress of trade negotiations.

The two-year return, seen as an indicator of expectations of higher federal funds rates, fell to 2.5.204% after a US closing of 2.529%.

AUSSIE REBOUND

The Australian dollar rebounded after falling more than 1% on Thursday on a Reuters report that the port of Dalian, in northern China, had imposed an unlimited ban on Australian coal imports.

On Friday, the Governor of the Reserve Bank of Australia, Philip Lowe, warned not to consider the restrictions as targeting Australia, and Prime Minister Scott Morrison said the ban did not bode well. a deterioration of the links between the countries.

Separate comments from Lowe that a rate hike may be appropriate next year also contributed to the rising dollar.

It was up 0.2 percent to $ 0.71025.

The US dollar rose slightly against the yen to settle at $ 110.76, while the euro gained less than 0.1% to buy $ 1.1322.

The, which follows the greenback against a basket of six major rivals, remained steady at 96.611.

small declines to increase 0.1% to 57.01 dollars per barrel. was almost unchanged at $ 67.09.

Gold rebounded after falling more than 1% on Thursday, rising about 0.2% to $ 1,325.16 an ounce.

Chart – The Chinese CSI300 first-rate index in China: https://tmsnrt.rs/2BXGLRJ