SYDNEY: Stocks in Asia, closing in on their worst year since 2011, rose with US futures on the last day of 2018 after US President Donald Trump reported “big progress” in trade talks with his Chinese counterpart. The yen declined.
The Stock Exchange of Thailand was closed.
The biggest gains were in Hong Kong, while S&P 500 Index and UK futures advanced in a reprieve from recent wild swings. Trump said in a tweet that negotiations were “moving along very well” toward a comprehensive deal and Chinese state media cited President Xi Jinping as saying he believed both sides wanted “stable progress”. Trading was thin with major markets in Japan and China closed and shortened sessions elsewhere. Oil extended gains on the trade optimism.
Australian shares reversed gains as the positive sentiment dampened after a gauge of China’s manufacturing industry missed estimates to decline in December, underscoring concern over the slowing domestic economy. The manufacturing purchasing managers index fell to 49.4, falling below 50 -- the line between expansion and contraction -- for the first time since 2016.
Notwithstanding the gains on the last day of 2018, the MSCI Asia Pacific Index has declined 16% this year, wiping out about $5 trillion in market value as the prolonged trade dispute took its toll, concerns about global growth picked up and a spike in volatility sidelined investors. The Shanghai Composite Index tumbled 25 percent, crowing it the worst major stock market globally, while Hong Kong’s Hang Seng Index hasn’t had this bad a year since 2011.
It’s a tale repeated around the world. Global stocks are set for their worst year since 2008 and oil is mired in its steepest quarterly slump since 2014. Plenty of event risks loom next year, from the UK vote on the Brexit deal to US-China trade talks and the continuing showdown between President Trump and Congress over the budget. The American political landscape is also unsettling investors following departures of senior officials and Trump’s repeated criticism of Federal Reserve Chairman Jerome Powell.
“It’s a positive development,” Tony Morriss, Bank of America Merrill Lynch head of economics and rates strategy, said in a Bloomberg TV interview, referring to the easing trade tensions. “What we’d like to see now is the market pricing out any further action from the Fed, the stock markets stabilizing and focusing on some positive headlines on trade. That still leaves an awful lot of uncertainty on the political side” going into 2019, he said.
Italian assets will come into focus Monday after the country’s populist government won final parliamentary approval for its 2019 budget at the 11th hour.
US stocks halted a two-day rally Friday as thin trading added to already-volatile markets, though the S&P 500 Index held onto its first weekly gain in a month. Treasuries, which rose on Friday, won’t be trading Monday because of the holiday in Japan.
Markets are also closed in South Korea, the Philippines, Taiwan and Thailand.