Asian markets on Thursday recovered from the previous day’s hammering, as oil prices bounced.
And the dollar further mounts on the back of expectations the US is better prepared to deal with a trade war with China. While investors remain on edge about a damaging standoff between the world’s two economic superpowers, there are hopes the two sides will avoid an escalation despite Donald Trump threatening tariffs on a further $200 billion of Chinese goods.
The optimism helped bargain buying Thursday, with Tokyo ending more than one percent higher and Hong Kong adding 0.6 percent.
Shanghai jumped 2.2 percent as the Chinese central bank set the struggling yuan’s US dollar fix at a strong level in a bid to soothe concerns about its recent sell-off, while the official Xinhua news agency in a commentary said the country’s equity market fluctuations were controllable. The remarks suggested leaders were ready to step in if needed, analysts said.
Sydney, Singapore, Seoul, and Taipei were also deep in positive territory.
However, Stephen Innes, head of Asia-Pacific trading at OANDA, warned: “we are little more than a headline away from another risk-off episode” and added that markets would likely remain volatile for some time.
“The prospects of another round of US tariffs directed at China have resurrected fears that the trade skirmish between Washington and Beijing could escalate with some investors now fearing a full-blown global trade war could be a reality,” he said.
“But the most damning signal is that dialogue… is pretty much non-existent and with a diplomatic solution appearing more unlikely as the days go by markets will remain on the defensive.”
Japan’s Nikkei has been given an extra nudge by a weaker yen, which helps exporters.
Despite the currency’s popularity as a safe haven in times of turmoil, the yen is at a six-month low against the dollar, which is getting support from the robust US economy.