Asian Shares Firm Ahead of US NFP Report; Japan Household Spending Disappoints

The Wall Street Journal reported Thursday that Washington and Beijing are still in disagreement over the size of China’s agricultural purchases. Meanwhile, China has given little indication on how negotiations with the U.S. are progressing.
James Hyerczyk
Asian Shares

The major Asia Pacific stock indexes are trading higher on Friday as traders prepare for the release of the U.S. Non-Farm Payrolls report for November, due to be released at 13:30 GMT. The South Korean KOSPI Index is posting the biggest gain, helped by a more than 2% jump in shares of industry heavyweight Samsung Electronics and chipmaker SK Hynix.

At 05:18 GMT, Japan’s Nikkei 225 Index is trading 23357.13, up 57.04 or +0.25%. Hong Kong’s Hang Seng Index is at 26385.20, up 168.16 or +0.64% and South Korea’s KOSPI Index is at 2078.26, up 17.52 or +0.85%.

China’s Shanghai Index is at 2900.23, up 0.76 or +0.03% and Australia’s S&P/ASX 200 Index is trading 6703.00, up 20.00 or +0.30%.

Trade News Update

The Wall Street Journal reported Thursday that Washington and Beijing are still in disagreement over the size of China’s agricultural purchases. Meanwhile, China has given little indication on how negotiations with the U.S. are progressing.

However, investors are hanging on to hope of a near-term trade deal after Bloomberg News reported Wednesday, citing sources, that both countries were inching closer to securing an agreement on the amount of tariffs that would be rolled back in a limited trade deal. President Trump also said Wednesday that he believed trade talks with Beijing were going “very well.”

Earlier in the week, stocks dropped sharply after Trump said he may delay a trade deal with China until after the 2020 U.S. presidential election.

Obviously, there are disagreements, but the markets seem to be consolidating because the negative news is not escalating and trade talks have not broken down either.

Japan’s Households Cut Spending amid Impacts from Sales Tax, Typhoon

Japanese households cut their spending for the first time in almost a year in October as a sales tax hike prompted consumers to rein in expenses and natural disasters disrupted business.

Household spending dropped 5.1% in October from a year earlier, government data showed on Friday, down for the first time in 11 months and the biggest fall since March 2016 when spending fell 5.3% and weaker than the median forecast for a 3.0% decline.

While the government has sought to offset the hit to consumers through vouchers and tax breaks, there are fears the higher tax could hurt an economy already feeling the pinch from global pressures.

Friday’s Events

The U.S. Labor Department is set to release the tally of nonfarm payrolls for November. Economists polled by Dow Jones are expecting 187,000 jobs were added last month. The Unemployment Rate is expected to stay at 3.6% in November, near the lowest in 50 years. Average Hourly Earnings are expected to have risen 0.3%.

Consumer sentiment in December from the University of Michigan’s Surveys of Consumer data is expected to come in at 96%, up from 95.6 in November.

Traders should also pay attention to Larry Kudlow, White House National Economic Council Director, when he joins CNBC’s “Squawk on the Street” on Friday. He could offer some valuable insight into how well the trade talks have been going.

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