Picture: REUTERS/ISSEI KATO
Picture: REUTERS/ISSEI KATO

Tokyo — Global shares rose on Monday and oil rebounded after upbeat China manufacturing surveys and as investors clung to hopes Beijing and Washington could reach a compromise in trade talks.

MSCI’s index of Asia-Pacific shares outside Japan gained 0.46%, reclaiming some of its loss on Friday while Japan’s Nikkei jumped 1.11%.

US stock futures gained 0.31% to near-record highs after a dip in a truncated US session on Friday due to Thanksgiving holiday.

Mainland Chinese shares also went higher, with the blue-chip CSI300 index rising 0.59% from a three-month low hit on Friday.

The market enjoyed a boost after the Caixin/Markit manufacturing purchasing managers’ index (PMI) rose to 51.8 in November from 51.7 in the previous month, marking the fastest expansion since December 2016.

“Output and new orders are both strong. The survey seems to suggest domestic demand is pretty strong even if one cannot have unrestrained optimism on the economic outlook,” said Naoki Tashiro, president of TS China Research.

Further escalation

MSCI’s broadest gauge of world shares ticked up 0.1% and stood within reach of its all-time peak hit in January 2018.

While US legislation supporting Hong Kong protesters last week raised concerns about US-China trade negotiations, investors are nonetheless holding the broad view that a further escalation in the trade war can be avoided.

“It looks a bit difficult for two countries’ leaders to shake hands and sign a deal this month. What is more likely is to essentially kick the can, with China buying more US farm products while the US postpones its next tariffs,” said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management.

“Markets will consider such an arrangement as a de facto deal whether they officially sign it or not,” he said.

Investors have long thought that the US will avoid imposing an additional 15% tariff on about $156bn of Chinese products on December 15 after signing a deal with China.

The two countries have been so far unable to bridge the gap over existing tariffs on Chinese goods, with Beijing demanding scrapping them as a part of any trade deal.

A trade deal between US and China was now “stalled because of Hong Kong legislation”, news website Axios reported on Sunday, citing a source close to US President Donald Trump’s negotiating team.

China’s foreign ministry last week lambasted as a serious interference in Chinese affairs US legislation signed by President Donald Trump on Wednesday backing protesters in Hong Kong.

In the currency market the yen weakened, helped also by expectations that Japan could put together a large-scale fiscal spending package to bolster its economy.

The dollar rose 0.3% to ¥109.73, a six-month high.

The euro stood little changed at $1.10175, bouncing back from seven-week low of $1.0981 hit in US trade.

The British pound slipped 0.24% to $1.2912 after opinion polls during the weekend showed the lead of Prime Minister Boris Johnson’s Conservative Party over the opposition Labour party narrowed.

Oil prices bounced back a tad after a big slump on Friday on record-high US crude production.

The market drew support from expectations that Opec and its allies are likely to extend existing oil output cuts when they meet this week, with non-Opec oil producer Russia supporting Saudi Arabia’s push for stable oil prices amid the listing of state oil giant Saudi Aramco.

Brent crude futures rose 1.34% to $61.30 a barrel while US West Texas Intermediate (WTI) crude gained 1.70% to $56.11 per barrel.

Reuters