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GLOBAL MARKETS-Asian stocks see brighter world as trade, UK clouds lift

Published 13/12/2019, 01:34
© Reuters.  GLOBAL MARKETS-Asian stocks see brighter world as trade, UK clouds lift
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* Asian stock markets : https://tmsnrt.rs/2zpUAr4

* Pound surges as exit polls show Tories with majority

* Nikkei highest since Oct 2018 on reports of Sino-U.S.

trade deal

* Markets scale back risk of rate cuts around the world

* Safe-haven bonds, yen fall away

By Wayne Cole

SYDNEY, Dec 13 (Reuters) - Asian share markets jumped on

Friday as a last-gasp Sino-U.S. trade deal and a likely major

election win by Britain's Conservative Party looked to have

cleared a couple of dark clouds from the global horizon.

The double dose of relief slugged safe-haven sovereign bonds

and the Japanese yen, even leading investors to scale back the

chance of more interest rates cuts around the world.

"Global investors have been given two of the biggest gifts

on their Christmas list and should be appreciative for a while

at least," said Sean Callow, a senior forex analyst at Westpac.

"Global equity indices such as MSCI World should set more

record highs and sterling could push above $1.36."

The pound hit its highest since mid-2018 as UK exit polls

seemed to rule out a shock win by the left-wing Labour

opposition, and could help clarify the outlook for Brexit.

Polls suggested Prime Minster Boris Johnson could gain a

commanding 368 seats in Britain's Parliament, settling another

long-standing uncertainty. The pound was last up 2.3% at $1.3464 GBP=D3 and reached

levels on the euro not visited since mid-2016.

A wave of trade euphoria had already lifted Wall Street to

record highs. Reuters reported the United States has agreed to

reduce some tariffs on Chinese goods and delay a tranche of

tariffs as part of a phase one deal. China also has agreed to make $50 billion in agricultural

purchases in 2020 as part of the deal, that person and another

U.S. source familiar with the talks said.

"If the U.S. cuts the current tariffs to some extent as

reported, that is not something markets have priced in, so we

could see a further leg up in the stock market," said Norihiro

Fujito, chief investment strategist at Mitsubishi UFJ Morgan

Stanley Securities in Tokyo.

"The Conservatives appear to be on course for a big win. We

are now finally seeing a clear direction on Brexit after three

years of deadlock."

LESS NEED FOR MORE CUTS?

In Asia, Japan's Nikkei .N225 climbed 2.1% to a 14-month

high, while South Korean stocks .KS11 firmed 1.2%. E-Mini

futures for the S&P 500 ESc1 rose 0.4% to another peak.

MSCI's broadest index of Asia-Pacific shares outside Japan

.MIAPJ0000PUS put on 0.5%.

Wall Street had celebrated the trade news with record highs.

The Dow .DJI ended Thursday up 0.79%, while the S&P 500 .SPX

gained 0.86% and the Nasdaq .IXIC 0.73%.

That was bad news for bonds and yields on U.S. 10-year

Treasuries US10YT=RR shot up to 1.95%, a rise of 16 basis

points in just two sessions.

Interest rate futures 0#FF: slipped as investors priced in

less chance of a rate cut from the Federal Reserve next year - a

shift seen across a range of developed nations.

Other safe harbours also took a beating, with the yen

sliding across the board. The dollar firmed further to 109.42

yen JPY= having risen 0.7% overnight.

The dollar fared less well elsewhere as the pound and the

euro both benefited from the UK exit polls. The euro added 0.5%

to $1.1189 EUR= , while the dollar dipped 0.35% on a basket of

currencies to 96.742 .DXY .

The dollar also lost out to the Chinese yuan to hit an

18-week low as any truce would be seen as a boon for the

export-heavy economy. The dollar was last at 6.9487 yuan CNH=

having shed a steep 1.2% overnight.

The shift from safe havens saw spot gold ease to $1,465.04

per ounce XAU= .

Oil prices rallied on hopes a trade deal would support

global growth and thus demand. O/R

U.S. crude CLc1 added 36 cents to $59.54 a barrel, while

Brent crude LCOc1 had yet to open.

Asia stock markets https://tmsnrt.rs/2zpUAr4

Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA

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(Editing by Lisa Shumaker and Sam Holmes)

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