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Asian Shares Rally On Trade Deal Reports

stock up 13dec19

Asian stocks posted strong gains on Friday after China said it is committed to resolving trade issues and British Prime Minister Boris Johnson's Conservative Party claimed a robust majority in Parliament.

Chinese shares rallied as U.S. President Donald Trump's tweet that the U.S. and China are close to a "big" deal helped assuage investor concerns over an escalation in the trade conflict.

The benchmark Shanghai Composite Index jumped 51.98 points, or 1.8 percent, to 2,967.68, while Hong Kong's Hang Seng Index soared 693.62 points, or 2.6 percent, to 27,687.76.

Japanese shares surged to a 14-month high as semiconductor-related shares extended their rally on reports that Washington and Beijing had reached a "phase one" trade deal in principle.

Investors shrugged of the Bank of Japan's quarterly Tankan Survey on business sentiment showing that large manufacturing in Japan weakened again in the fourth quarter of 2019. The diffusion index stood at 0 - shy of expectations for +3 and down from +5 in the three months prior.

A separate report showed Japanese industrial production declined more than initially estimated in October. Industrial production fell 4.5 percent month-on-month in October. According to the initial estimate, production had decreased 4.2 percent.

The Nikkei 225 Index spiked 598.29 points, or 2.6 percent, to 24,023.10, hitting its highest levels since October last year. The broader Topix finished 1.6 percent higher at 1,739.98.

Chip-related shares extended recent gains on hopes that the tech industry is bottoming out. Taiyo Yuden, Advantest, TDK Corp. and Tokyo Electron soared 3-6 percent. Financials and non-ferrous metal companies also posted strong gains.

Australian markets advanced, with metal and mining stocks leading the surge on hopes that a U.S.-China trade deal would offer some relief to top metals consumer China's slackening growth.

The benchmark S&P/ASX 200 Index climbed 30.90 points, or 0.5 percent, to 6,739.70, while the broader All Ordinaries Index ended up 33.80 points, or 0.5 percent, at 6,844.60.

Mining heavyweights BHP and Rio Tinto rallied 1.9 percent and 1.6 percent, respectively, while smaller rival Fortescue Metals Group jumped 2 percent.

Commonwealth Bank of Australia rose 0.4 percent after it flagged additional payments to current and former employees who were found in a review to have been underpaid. The other three big banks rose between 1.4 percent and 2 percent.

Energy stocks such as Origin Energy and Woodside Petroleum gained over 1 percent after oil prices scaled three-month highs.

Lynas Corp. soared 8.9 percent after the company said it submitted a tender in response to the U.S. Department of Defense's call for proposals to build a heavy rare earths separation plant.

On the other hand, gold miners suffered heavy losses, with Evolution Mining down 7.8 percent and Northern Star Resources losing 6.1 percent.

Seoul shares hit a seven-month high, with the benchmark Kospi climbing 32.90 points, or 1.5 percent, to 2,170.25 on the back of reports that China has reached the first phase of a trade deal with the U.S.

The White House has agreed to suspend some tariffs on Chinese goods and reduce others in return for Beijing's pledge to hike purchases of U.S. farm products in 2020, media reports said citing sources.

Meanwhile, New Zealand shares ended lower after a survey showed manufacturing activity in the country expanded at a slower pace in November.

The benchmark S&P/NZX 50 Index ended down 66.39 points, or 0.6 percent, at 11,241.59. Fuel retailer Z Energy shares plummeted 12.8 percent after the fuel retailer cut its full-year earnings guidance reflecting low retail margins.

Malaysia's KLSE Composite index edged up 0.2 percent after official data showed the country's unemployment rate fell to 3.2 percent in October from 3.3 percent in September.

U.S. stocks rose notably overnight after President Donald Trump said the U.S. is getting close to a "big deal" with China.

Also, a Wall Street Journal report said Washington has offered to slash existing tariffs and cancel new ones set to take effect Sunday as part of a deal to boost Chinese purchases of U.S. farm goods and obtain other concessions.

The Dow Jones Industrial Average gained 0.8 percent, while the tech-heavy Nasdaq rose 0.7 percent and the S&P 500 added 0.9 percent to reach fresh record closing highs.

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