Asian shares crept ahead on Thursday as a lull in the Sino-U.S. trade tussle and talk of more Chinese stimulus helped calm nerves, while tensions in the oil market grew ahead of an OPEC meeting that could expand the supply of crude. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.4 percent, while Japan’s Nikkei added 0.7 percent. Australia’s main index had another strong day, rising 1 percent on fund manager demand before the end of the local financial year next week. Futures for the S&P 500 added 0.4 percent as investors waited for new developments on global trade. After a hesitant start, Chinese markets moved into positive territory as Shanghai blue chips rose 0.6 percent.
The mere absence of new threats from President Donald Trump on tariffs was enough to stem recent selling, with investors clinging to the hope that all the bluster was a ploy which would stop short of an outright trade war. “Many participants see the Trump Administration’s hard line as part of the negotiating strategy,” said Richard Grace, chief currency strategist at CBA. Markets had also been encouraged by the People’s Bank of China’s move to set firm fixings for its yuan, along with the addition of extra liquidity. There was also much speculation the central bank would cut bank reserve requirements, thus boosting lending power in the economy.
On Wall Street, resilience in tech stocks helped the Nasdaq to an all-time high, though the moves were modest. While the Dow Jones fell 0.17 percent, the S&P 500 gained 0.17 percent and the Nasdaq 0.72 percent. Twenty-First Century Fox Inc climbed 7.5 percent after Walt Disney Co sweetened its offer for some of the company’s assets to $71.3 billion, looking to topple Comcast Corp’s bid.
Waiting on the BOE
Receding risk aversion softened safe-havens such as the yen, with the dollar adding 0.24 percent to 110.62. The dollar also firmed 0.1 percent against a basket of currencies to 95.159, just off an 11-month top of 95.299. The euro was flat at $1.1571. Sterling was pinned near seven-month lows at $1.3169 having made only a fleeting bounce after Prime Minister Theresa May won another crucial Brexit vote in parliament. The Bank of England holds a policy meeting later in the session but not a single analyst polled by Reuters expects a rate hike, and some are getting cold feet about a rise in August given recent soft economic data.
While the European Central Bank has signalled an end to bond buying it also pledged to keep rates low past next summer, while the Bank of Japan shows no sign of winding back its stimulus. “It feels like the yellow warning lights are flashing for the global economic system,” noted analysts at Citi. “However, with the ECB and BoJ still pumping in liquidity and keeping rates lower for longer, the chances of a systemic event are low.”
Oil prices eased a touch as nerves grew ahead of Friday’s meeting between OPEC and other big producers, including Russia. Saudi Arabia is trying to convince fellow OPEC members of the need to raise oil output, according to sources familiar with the talks. Iran on Thursday signalled it could be won over to a small rise in output, potentially paving the way for a deal. Brent crude futures were down 8 cents at $74.66 a barrel, while U.S. crude was flat at $65.71.