Investors Doubt Trade War Escalation

5 April, 2018

Asian Markets Rising As Investors Doubt Trade War Escalation

Asian markets turned higher on Thursday as investors were confident that the U.S. and China would come to an agreement on trade, as they saw signs of continued negotiations, and an unwillingness on both sides to escalate threatened retaliatory tariffs.

Singapore is leading gains in the region, trading higher by 2%, but Japan’s Nikkei is also making ery good gains, trading 1.63% higher as the lunch break comes to an end in Tokyo.

The overnight reversal on Wall Street that saw the Dow Industrials come back from a 500 point slide to trade 150 points higher at the close is definitely having a positive effect on sentiment across Asia today. Japanese equities are also getting a boost from the continued weakness in the Yen versus the U.S. dollar.

Surprisingly, the Yen hasn’t strengthened in response to global trade uncertainties, but is instead edging higher, and is ready to test the 107.00 resistance level. There is additional resistance just above at the 107.75 level, but beyond that the USD/JPY could trade significantly higher.

Such a move in the Yen could be just what the Japanese equity market needs to get into rally mode, as Japanese multi-nationals benefit from weakness in the Yen against the U.S. dollar.

In other markets gold is sliding lower in response to the uptick in risk appetite, and crude is reversing its overnight weakness, making a modest gain.

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