Asia Mixed On Monday Woe, EU Market Surges On Trade News, Autos Lead The US Higher

Asian markets closed mixed on Tuesday following Monday’s wild ride in US equities. Indices in the EU were up an average 1.75% in early Tuesday. The trade news from China helped lift US indices in early Tuesday trading.
Thomas Hughes

Asian Markets Were Mixed On Tuesday

Asian markets closed mixed on Tuesday following Monday’s wild ride in US equities. The index moves were small in most cases but no two performed quite the same. The Australian ASX led advancing markets with a gain of 0.42% led by the banking sector while the Japanese Nikkei led declining indices with a loss near -0.35%. In China, the Shang Hai led with a gain of 0.37% compared to a 0.07% advance for the Hong Kong-based Heng Seng.

Traders were wary following Monday’s bag of news. In the US, a major market rebound signals a possible bottom to the October/November correction while developments in the UK and India add confusion to an already uncertain marketplace. In the UK, Prime Minister Theresa May has delayed a crucial vote on her Brexit deal with the EU. The delay is not unexpected but adds another element of uncertainty to the Brexit process. The Brexit deadline is only a few months away, failing to reach an agreement could lead to a hard-Brexit, Brexit without a trade deal, and that will make big waves in global financial circles.

In Japan, shares of tech-conglomerate Softbank surged nearly 2.5%. The move was sparked by news the IPO of Softbank’s mobile unit had been priced at $13.25 per share. The pricing is above market expectation and sign appetite for IPO’s is still alive and well.

EU Market Up On Trade News

Indices in the EU were up an average 1.75% in early Tuesday trading on word that trade talks between the US and China were progressing as expected. The news out of Beijing is that talks between the US and China are confirmed, news contrary to fears that have emerged since the G-20 meeting earlier this month.  Chinese Vice Premier Liu is cited as the source of the news.

Regarding the indices, the German DAX led with a gain of 1.95% while the French CAC and UK FTSE 100 were not far behind with gains of 1.90% and 1.55% respectively. All sectors and major bourses were positive in early trading, led by the miners. Shares of Antofagasta, Rio Tinto, and Anglo American were all up more than 3%.

Autos Lead Markets In The US

The trade news from China helped lift US indices in early Tuesday trading. The broad market SPX, blue-chip Dow Industrials, and tech-heavy NASDAQ Composite were all looking at 1.0% gains in early pre-market futures trading. The move was led by the auto sector and details on trade talks reported by Bloomberg. According to the news agency, China is moving toward lowering tariffs on autos imported from the US.

Chinese tariffs on autos were raised to 40% in August in retaliation for the US tariffs on Chinese imports. US President Trump Tweeted after the G-20 meeting China had agreed to lower these tariffs, this is the first sign that such an agreement is in place and happening. The auto sector has been under immense pressure since the trade-war began because it is closely linked with international trade at all levels. Shares of GM led with a gain near 2.4% followed by a 2.25% advance for Ford and a 2.0% gain for Tesla. Traders will be watching for more news on trade this week, as well as a policy statement from the ECB which is due out on Thursday.

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