Asian markets push in with global rally with G7 in focus

Asian markets built on their latest
rally Thursday as investors tracked another strong lead from Wall Street,
with fresh upbeat US data reinforcing optimism in the global outlook,
overshadowing simmering trade concerns.

The euro also continued its recovery from last week’s Italy-fuelled
plunge, with the European Central Bank’s top economist said it would discuss
winding down its crisis-era stimulus.

All three main indexes in New York rose, with the Nasdaq hitting a third
straight record, after a record reading on US exports for April, which
indicated the world’s top economy is in fine fettle.

Banks were among the big winners as the ECB’s massive bond-buying regime,
which has kept borrowing costs low, appears to be coming to an end after
chief economist Peter Praet said such a move would be on the agenda at next
week’s policy meeting.

The euro — which dallied with $1.15 last week — briefly climbed past
$1.18 on Wednesday before easing back, but it held up in Asia.

In equity markets, Tokyo ended the morning session one percent higher,
while Hong Kong rose 0.6 percent — putting it on course for a sixth
successive gain.

Shanghai added 0.3 percent, Sydney was 0.8 percent higher and Seoul put on
0.7 percent. Singapore, Taipei, Wellington, Manila and Jakarta were also
sharply higher.

– Growing divisions –

“While interest rates are usually a negative for equity markets, investors
are viewing higher interest rates in a favourable light, reflective of
surging economic growth, not as a buffer against inflation,” said Stephen
Innes, head of Asia-Pacific trade at OANDA.

The positive mood comes as traders await this weekend’s Group of Seven
summit in Quebec, which comes after Donald Trump sparked fury by imposing
steel and aluminum tariffs on Canada, Mexico and the European Union.

That was met with retaliatory measures from all three.

Canadian Prime Minister Justin Trudeau and German Chancellor Angela Merkel
have said they are braced for tense discussions, while Japanese Finance
Minister Taro Aso has referred to the G7 as the “G6+1”, highlighting the
growing divisions.

“Reports are that not only is… Trump going to continue to pursue his
hard line on trade but also that … Trudeau has raised the ire of the White
House with his response to US tariffs and more are on the way,” said Greg
McKenna, chief chief market strategist at AxiTrader.

“If Trudeau is prepared to fight then I’d expect others will too. So
strangely, while the Chinese are doing their best to de-escalate what the
Americans are doing the chance of a conflagration with US allies grows.”

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 1.0 percent at 22,839.85 (break)

Hong Kong – Hang Seng: UP 0.6 percent at 31,460.54

Shanghai – Composite: UP 0.3 percent at 3,125.38

Euro/dollar: UP at $1.1796 from $1.1774 at 2100 GMT

Pound/dollar: UP at $1.3436 from $1.3413

Dollar/yen: DOWN at 110.12 yen from 110.19 yen

Oil – West Texas Intermediate: UP 26 cents at $64.99 per barrel

Oil – Brent Crude: UP 30 cents at $75.66 per barrel

New York – Dow Jones: UP 1.4 percent at 25,146.39 (close)

London – FTSE 100: UP 0.3 percent at 7,712.37 (close)