What you need to know:
>Japanese stocks climb to 5-week high.
>Yields on 10-year Japanese bonds inched towards 0.1 per cent.
>Macquarie slips on earnings.
>Oil prices rise.
Stock Market News Today:
Asia-Pacific equities diverged on Thursday as traders digested news that the EU and US have declared a ceasefire in their trade war.
Trump and Junker on trade
The head of European Commission attempted to head off a tariffs war in talks with the US president on Wednesday. The two have agreed to launch new negotiations. However Europe should be sceptical as to whether Donald Trump is serious about a deal.
China pulls approval for Facebook venture
Beijing has withdrawn its support for the social media group’s new subsidiary that was set to open in Zhejiang as a way around the country’s ban on Facebook and its messaging app WhatsApp. The news comes as shares in Facebook tumbled as much as 10 per cent on reports its user growth has slowed.
Russian President Vladimir Putin is expected to meet his Turkish counterpart Recep Tayyip Erdogan at the Johannesburg meeting of emerging economies on Thursday. Meanwhile, in Africa, both India’s Narendra Modi and China’s Xi Jinping are on a mission to woo resource-rich countries.
Mario Draghi is set for a grilling on a core element of the European Central Bank’s new strategy — a change in message on interest rates that may have been lost in translation.
US stocks turned sharply higher in late afternoon trade on Wednesday after the EU and the US agreed to launch new negotiations to defuse rising transatlantic trade tensions.
US president Donald Trump and European Commission president Jean-Claude Juncker said they have agreed to work together to remove all tariffs, trade barriers and subsidies on non-auto industrial goods.
Overnight the S&P 500 ended 0.9 per cent higher and the Nasdaq Composite added 1.2 per cent to close at a record high.
That mood carried over into Asia with Japan’s Topix gaining 0.6 per cent to a five-week high as all sectors — excluding healthcare and telecommunications — gained.
South Korea’s Kospi was 0.6 per cent higher with the technology sector up 1.3 per cent. Chipmaker SK Hynix climbed 2.4 per cent after the company’s second-quarter operating profit beat estimates.
In Australia, the S&P/ASX 200 was flat per cent lower amid drops in index heavyweights. Macquarie Group, one of the country’s biggest banks, fell as much as 4.7 per cent after it named its asset management head as its first female chief executive and said its first-quarter earnings had dipped compared to the previous three months.
Hong Kong’s Hang Seng index had a choppy start, pulling back from an early gain to trade 0.7 per cent lower. Technology stocks were down 0.8 per cent and consumer non-cyclicals slipped 1 per cent. The Hang Seng China Enterprises index of Hong Kong-listed major Chinese companies was down 0.7 per cent.
Meanwhile, in mainland China, the CSI 300 index of Shanghai and Shenzhen stocks shed 0.9 per cent.
In currencies, the dollar index, a measure of the greenback against a basket of peers was 0.2 per cent lower at 94.159 having touched a fresh two-week lower earlier in Asia trading.
The euro was holding steady at $1.1731 ahead of the European Central Bank’s July meeting. The pound was 0.1 per cent stronger at $1.3201, its highest level in almost a week.
The Japanese yen was heading for its seventh consecutive day of gains against the dollar, strengthening to ¥110.79 per dollar.
Yields on 10-year Japanese government bonds inched toward 0.1 per cent, marking a fresh six-month high amid speculation the country’s central bank could scale back its stimulus programme. Yields on the sovereign notes rose as much as 2.5 basis points to 0.099 per cent, just shy of 0.01 per cent and touching their highest level in nearly six months.
Robert Carnell, chief economist and head of Asia-Pacific research for ING, said that the Bank of Japan’s removal of any mention of reaching its inflation targets in 2019 at its April meeting has prompted some to suggest the bank might downgrade its forecast and adopt a lower target at its July meeting next week.
However, he doubts this will happen. “For all that it may tinker with other aspects of its policy, the BoJ, in our view, does not seem to have any intention of changing its inflation target, and any changes may amount to no more than tweaking their ETF buying,” Mr Carnell said.
However, the yield on the 10-year US Treasury was moving in the opposite direction, down 1bp to 2.963 per cent.
Oil prices rose with Brent crude up 0.6 per cent at $74.38 a barrel while West Texas Intermediate edged higher to $69.33 barrel. The moves came after the Energy Information Administration said US stockpiles fell more than expected in the week ended July 20.