Abu Dhabi, UAEWednesday 22 January 2020

Asian stocks reach eight-month high as global clouds lift

Japan's Nikkei reached highest since October 2018 on reports of US-China trade deal

Nikkei climbed 2.4 per cent on Friday morning. AP
Nikkei climbed 2.4 per cent on Friday morning. AP

Asian shares scaled eight-month peaks on Friday as a last-gasp US-China trade deal and the Conservative Party’s majority win in the UK elections looked to have cleared two dark clouds from the global horizon.

"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."

MSCI is a global provider of equity, fixed income, hedge fund stock market indexes and multi-asset portfolio analysis tools.

In Asia, Japan's Nikkei climbed 2.4 per cent to a 14-month top, while South Korean stocks firmed 1.3 per cent.

Hong Kong stocks rallied more than 2 percent on Friday morning, while the Hang Seng index surged 2.06 per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan climbed 1.2 per cent to its highest since late April. Shanghai blue chips advanced 1.4 per cent.

The pound hit its highest since mid-2018 after exit polls ruled out a shock win by the left-wing Labour opposition, and will help clarify the outlook for Brexit.

A wave of trade euphoria had already lifted Wall Street to record highs. There are reports that the US has agreed to reduce some tariffs on Chinese goods and delay a tranche of tariffs as part of a phase one deal.

"If the US cuts the current tariffs to some extent as reported... 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."

Wall Street had celebrated the trade news with record highs. The Dow – an index that measures the stock performance of 30 large companies listed on stock exchanges in the US – ended Thursday up 0.79 per cent. Whereas, the S&P 500 - that measures the stock performance of 500 large companies listed on stock exchanges in the US - gained 0.86 per cent.

Updated: December 13, 2019 10:31 AM

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