Tokyo – Asian shares edged up on Thursday on a weaker dollar and hopes of more economic stimulus in China.
Though many stocks seesawed as markets awaited some details on this week’s U.S.-China trade talks amid hopes, an all-out trade war could be averted.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose by 0.2 per cent, hovering at a near four-week high, helped by a fall for the dollar.
Japan’s Nikkei closed 1.3 per cent lower.
European stocks are expected to open lower. Spread-betters looked for Britain’s FTSE to be 0.2 per cent lower, France’s CAC off by 0.5 per cent and Germany’s DAX down by 0.4 per cent.
Wall Street’s S&P 500 rose 0.41 per cent on Wednesday, extending its gains from 20-month lows touched around Christmas to more than 10 per cent.(Asian stock markets: But E-Mini futures for the S&P 500 were down by half a per cent.
Weak Chinese inflation data raised the prospect of further government stimulus but China’s blue-chip CSI 300 went back into the red, losing 0.2 per cent, and Hong Kong’s Hang Seng struggled to maintain a small gain.
Delegations from China and the United States ended three days of trade talks in Beijing on Wednesday in the first face-to-face negotiations since both sides agreed to a 90-day truce in their trade war.
China’s commerce ministry said on Thursday the talks were extensive, and helped establish a foundation for the resolution of each others’ concerns.
However, there were few concrete details on the meetings, which were not at a ministerial level, so were not expected to produce a deal to end the trade war.
Risk assets extended a day-long rally overnight after minutes from the Federal Reserve’s December meeting showed that many policymakers believed they could be patient about future U.S. monetary tightening.
However, a few did not support the central bank’s rate increase in December.
Figures out of China on Thursday showed the country’s consumer prices and factory-gate inflation both increased less than expected in December, with the latter rising at the slowest pace in more than two years.
The pace of month-on-month increases in factory-gate inflation declined for a second straight time.
“If this trend persists, it may turn negative on year-on-year terms this year and more radical stimulus measures, such as benchmark interest rate cuts, may become possible,” said Betty Wang, senior China economist at ANZ Research.
Oil also caught investors’ attention after U.S. crude and Brent jumped overnight, helped by optimism that Sino-U.S. trade tensions are easing, while OPEC-led crude output cuts also provided support.
U.S. West Texas Intermediate crude futures on Wednesday gained almost 5.2 per cent, while Brent crude futures rose more than 4.6 per cent, extending a rally that pushed futures up about 14 per cent this year.
Both benchmarks gave up some of their recent gains on Thursday. U.S. crude was last trading 59 cents lower at 51.76 dollars a barrel, down 1.15 per cent. Brent lost 57 cents to 60.87 dollars, off by 0.93 per cent.
Chris Weston, Melbourne-based head of research at foreign exchange brokerage Pepperstone, said he viewed more gains in oil prices as a key driver for any further rise in risk appetite.
If U.S. crude futures can break through the 55 dollars level, “you’’ are going to see real yields probably lower.
That’s really good for the cost of money and taking some further headwinds out of the U.S. dollar,” he said.
U.S. Treasury yields last stood at 2.699 per cent, down from 2.710 per cent at the U.S. close on Wednesday.
The dollar remained on the defensive after hitting its lowest level since mid-October, amid the signs Fed policymakers are becoming more cautious about future rate hikes and as investors unwound safe-haven bets due to optimism over the trade talks.
The Yuan strengthened, breaching the key 6.8 per dollar level for the first time since August in both onshore and offshore trade.
The greenback was down a tenth of a per cent against the Euro at 1.1556 dollars.
The single currency gained 0.9 per cent against the dollar during the previous session, its biggest one-day gain since late June.
Against a basket of six major rivals, the dollar briefly dipped to 95.029, its lowest since Oct. 16, and was last down by 0.1 per cent.
The dollar lost 0.2 per cent against the yen, a safe-haven currency that’s often preferred by traders during times of market and economic stress.
The Canadian dollar retreated in line with oil prices, and last traded down 0.2 per cent at 1.3232 Canadian dollar. It had risen to a five-week high during the previous session.
The Bank of Canada held interest rates steady as expected on Wednesday but said more increases would be necessary even though low oil prices and a weak housing market will harm the economy in the short term.
In commodity markets, spot gold was 0.2 per cent higher at 1,296.40 dollar, edging toward a near seven-month peak of 1.298,60 dollars scaled on Friday.