Asia report: Markets finish higher as China announces US tariff cut

In Japan, the Nikkei 225 was up 2.38% at 23,873.59, as the yen remained stable against the dollar to last trade at JPY 109.83.

Of the benchmark’s major components, automation specialist Fanuc was up 2.85%, fashion firm Fast Retailing added 3.3%, and technology behemoth SoftBank Group was ahead 3.28%.

The broader Topix index was also positive, adding 2.07% by the time it closed in Tokyo, settling at 1,736.98.

On the mainland, the Shanghai Composite was 1.72% stronger at 2,866.51, and the smaller, technology-soaked Shenzhen Composite leapt 2.9% to 1,727.24.

China’s Ministry of Finance confirmed it would halve tariffs on hundreds of imports from the United States from the afternoon of 14 February.

In its statement, the ministry said the decision was made in a bid to “advance the healthy and stable development of China-US trade”.

It would apply to around $75bn of imports from the US, which Beijing had levied tariffs on as part of the tit-for-tat trade war between the two economic superpowers in September 2019.

South Korea’s Kospi was 2.88% higher at 2,227.94, while the Hang Seng Index in Hong Kong rose 2.64% to 27,493.70.

The blue-chip technology stocks were higher in Seoul, with Samsung Electronics up 2.69% and chipmaker SK Hynix rising 2.87%.

Ongoing concerns around the coronavirus outbreak remained at the top of the agenda, with markets in Europe and the US advancing on Wednesday after a report from Reuters that a research team at China’s Zhejiang University had found a drug to treat the virus emerged.

The World Health Organisation was quick to pour cold water on sentiment, however, saying that there were “no known effective therapies against this 2019-nCoV”.

At the same time, a UK scientist told Sky News that the British team looking into a vaccine for the Wuhan coronavirus had made a “significant breakthrough”, and cut a part of the normal development time to 14 days from between two and three years.

At last count overnight, the virus had killed more than 500 people in China, with the National Health Commission reporting that more than 28,000 had been infected.

“No vaccine for the coronavirus which triggered the sell-off has been discovered yet, with the death toll jumping to 563 as of Wednesday night,” said FXTM senior research analyst Lukman Otunuga.

“Infections also continue to be on the rise with 2,987 new confirmed cases - so what is driving risk assets?”

Otunuga said multiple factors could have been attributed to the change in investor mood in recent days.

“The latest economic data has highlighted a pick-up in global manufacturing and services activity, particularly in the US.

“State-owned Chinese companies are likely to intervene through buying stocks if markets experience a massive meltdown, hence preventing big investors from selling their holdings.”

The expectation that central banks and governments were ready to ease monetary and fiscal policies was contributing the most to the latest surge in risk assets, Otunnuga explained.

“The People’s Bank of China has already pumped billions of Dollars into the financial system and Thailand’s central bank was the first to cut interest rates on Wednesday in response to the virus outbreak.”

Oil prices were higher at the end of the Asian day, with Brent crude last up 0.25% at $55.42 per barrel, and West Texas Intermediate rising 0.98% to $51.25.

Australia’s S&P/ASX 200 was 1.05% higher, ending its trading session at 7,049.20, as fresh data from the Australian Bureau of Statistics showed the country’s retail sales fell 0.5% on a seasonally-adjusted month-on-month basis in December.

Across the Tasman Sea, New Zealand’s markets were closed for that country’s Waitangi Day national holiday.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.04% at AUD 1.4828, and the Kiwi retreating 0.12% to NZD 1.5464.