Asia report: Markets finish firmer amid soaring trade optimism

Markets in Asia finished well into the green on Friday, with the main boards in Japan and Hong Kong soaring on reports that the US and China had reached a first phase deal on trade.

In Japan, the Nikkei 225 was up 2.55% at 24,023.10, as the yen weakened 0.31% against the dollar to last trade at JPY 109.65.

Looking at the benchmark index’s major components, Uniqlo owner Fast Retailing surged 4.39%, as Fanuc rose 2.81% and SoftBank Group added 1.25%.

The broader Topix index was 1.59% higher in Tokyo, finishing its trading day at 1,739.98.

In fresh data out of Japan, the central bank’s ‘tankan’ survey showed the country’s large manufacturers’ business confidence had fallen to its lowest level in over six years.

On the mainland. the Shanghai Composite was 1.78% firmer at 2,967.68, and the technology-focussed Shenzhen Composite moved ahead 1.48% to 1,660.55.

South Korea’s Kospi was 1.54% higher at 2,170.25, while the Hang Seng Index in Hong Kong advanced 2.57% to 27,687.76.

The blue-chip technology stocks were higher in Seoul, with Samsung Electronics rising 2.63% and chipmaker SK Hynix surging 5.4%.

Trade optimism was the theme of the day in the region, after CNBC reported overnight that the White House had offered to cancel its planned round of 15% tariffs on Chinese goods, which were due to come into effect on Sunday.

The report also suggested Washington was prepared to cut some of its existing charges on around $360bn worth of imports from China.

By the time bourses closed in Asia, there had still not been any official confirmation of the reports from either side of the Pacific Ocean, however.

“While markets are trading higher on the back of these reports, there is an element of caution about the moves we've seen so far,” said Oanda analyst Craig Erlam.

"Investors have been too eager before to buy into a trade deal and may be a little reluctant to be so again but should this get over the line, this year's Santa rally may really take off."

Currency movements were also closely watched by traders, with sterling moving higher on the dollar as it became clear that Boris Johnson’s Conservative Party had won a thumping majority in the UK’s general election.

The pound was last up 1.7% against the dollar, at $1.3385.

“The Conservative Party has secured an historic mandate with a thumping victory, providing clarity for investors where there was confusion,” said Neil Wilson, chief market analyst at Markets.com.

“For the markets and for business this is the perfect result - a clear majority for the Tories, the Corbyn risk nullified entirely, a major reduction in uncertainty around Brexit and even a quick Budget to inject the economy with some added impetus.

“The only doubts are around the next phase of Brexit -the future relationship - but with a large majority the government will be in a better place to negotiate and do what it needs to do.”

Oil prices were higher as the region entered the weekend, with Brent crude last up 1.46% at $65.15 per barrel, and West Texas Intermediate rising 1.14% to $59.86.

In Australia, the S&P/ASX 200 was 0.46% stronger at 6,739.70, with major miner BHP among the leading risers, adding 1.94% in Sydney trading.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was the odd one out in the region, slipping 0.6% to 11,241.59.

That came as fuel distributor and retailer, Z Energy, issued a profit warning and told shareholders it was looking at a smaller dividend.

Z Energy shares ended the day down 12.8%, having fallen more than 17% during the session.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.1% at AUD 1.4460, and the Kiwi advancing 0.4% to NZD 1.5097.