Asian shares hit 18-month high on U.S, China trade optimism

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Asian shares scaled an 18-month high on Friday while oil prices stayed buoyant in a holiday-shortened week, as investor optimism improved on hopes a U.S.-China trade deal would soon be signed.

Traders returned from their Christmas and Boxing Day break to digest comments from Beijing that it was in close contact with Washington about an initial trade agreement, shortly after U.S. President Donald Trump talked up a signing ceremony for the recently struck Phase 1 trade deal.

In early European trade, the pan-region Euro Stoxx 50 futures STXEc1 added 0.4%, German DAX futures FDXc1 rose 0.6% while FTSE futures FFIc1 were up 0.5%.

In an indication of a positive start on Wall Street, the S&P 500 e-mini futures ESc1 gained 0.12%.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS jumped 0.7% to 555.42, a level not seen since mid-2018. It is up more than 16% so far this year.

Japan’s Nikkei .N225 was off 0.4%, but on track for a near 19% rise this year, matching the annual increase of 2017.

Australia’s benchmark index rose 0.4%. Chinese shares gave up early gains with the blue-chip CSI300 .CSI300 down 0.1%.

The rally in global share indices is in sharp contrast to a plunge late last year when fears about the impact of the Sino-U.S. trade war had sapped investor confidence.

The worries scuttled capital expenditure plans over much of 2019, but strong employment and signs of an improving global economy suggest that will change next year.

The U.S. Federal Reserve’s policy easing, economic data that has come in above low expectations, and corporate profits have helped lift stocks this year along with trade-related optimism.

Market participants are now waiting for fourth-quarter financial results to be announced in January for indication on whether sentiment among corporates has actually improved.

On Thursday, MSCI’s all-country world index and Wall Street’s Dow Industrials, the benchmark S&P 500 and the technology-rich Nasdaq all closed at record highs.

MSCI’s gauge of stocks across the globe gained 0.38% to a record, on track for its best year since 2009. The index has gained 24% this year.

OIL, GOLD RETAIN GAINS

Both oil and gold held on to their recent gains.

Brent crude, the global benchmark, extended gains into a fourth session, hitting $68.10 per barrel, the highest since mid-September. U.S. West Texas Intermediate CLc1 crude gained 11 cents to $61.79 a barrel.

Brent has rallied about 25% in 2019, supported by supply cuts by OPEC and allies including Russia.

Gold prices XAU= were a bit shy of a two-month high at $1,509.22 an ounce. They have been on the rise recently as a hedge against dollar weakness and increased equity market volatility in 2020.

The rally in oil and gold boosted commodity-linked currencies in the past 24 hours with the Australian and New Zealand dollars AUD=D3 NZD=D3 soaring to their highest since late-July at $0.6956 and $0.6681, respectively.

The U.S. dollar was a tad weaker against the Japanese yen at 109.48.

The dollar index .DXY was a shade weaker at 97.440 against a basket of six major currencies, with the euro EUR= up a notch and the British pound GBP= mostly flat.

Peace PIAK

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