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08.05.2020, 10:44

Global Asia Stocks Poised to Rise as Upbeat Earnings Trump Jobs Gloom

Asian stocks were set to track Wall Street gains on Friday after upbeat corporate earnings took the focus off upcoming data that is expected show the worst US unemployment rate in more than 70 years.

Australian shares are set to inch higher on Friday, tracking gains in US stocks, which rose after a number of upbeat earnings reports led by PayPal. The positive economic data from China is also likely to boost sentiment. All major indices on Wall Street clocked in gains with the Nasdaq erasing all losses accrued in 2020. Elsewhere, China's exports for April came in far stronger than expected, signalling swift recovery after the coronavirus pandemic. The local share price index futures added 0.09% or 5 points, a 8.8-point premium to the underlying S&P/ASX 200 index close. The benchmark fell 0.4% on Thursday. New Zealand's benchmark S&P/NZX 50 index rose 0.3% to 10,678.37 in early trade.

Japanese shares rose modestly at the open along with those in Sydney and Seoul. S&P 500 contracts edged higher following gains in US stocks. Japanese stocks led gains among the region’s major markets with the Nikkei 225 jumping 1.29% in early trade as shares of Family Mart surged more than 3%. The Topix index also rose 1.19%. South Korea’s Kospi advanced 1% while the Kosdaq index was 0.91% higher. Shares in Australia also edged higher with the S&P/ASX 200 rising 0.66%. Overall, the MSCI Asia ex-Japan index traded 0.41% higher.

Japan’s economy minister Yasutoshi Nishimura said on Friday that more prefectures were reporting zero coronavirus cases on a daily basis and lifting the state of emergency for those regions before the nationwide deadline was within sight.

The broader Topix gained 2.2% to 1,458.28, with all but one of the 33 sector sub-indexes on the Tokyo exchange finishing on the positive territory. Highly cyclical iron and steel, non-ferrous metals and sea transport were the top three performing sectors on the main bourse. Nippon Steel Corp and JFE Holdings Inc jumped 7.1% and 7.5%, respectively, while Nippon Yusen KK rose 3.7%.

Taking a positive cue from Sino-US phone talks and Chinese peers China-related shares listed on the Tokyo Exchange also outperformed, with Fanuc Corp rising 3.7%, Komatsu Ltd up 2.9% and Hitachi Construction Machinery Co Ltd advancing 3.9%.

Top US and Chinese trade representatives discussed their Phase 1 deal over the phone on Friday with China saying they agreed to improve the atmosphere for its implementation and the United States saying both sides expected obligations to be met. Chinese stocks closed higher on Friday as investors cheered Beijing opening up its financial markets further to foreign investors and talks between US and Chinese trade officials. On Friday, foreign investors purchased a net of about 6.6 billion yuan ($932.59 million) worth of A-shares via the Stock Connect linking Hong Kong and mainland in the morning.

Hong Kong stocks rallied on Friday after Beijing further opened up its financial markets to foreign investors and as talks between US and Chinese trade officials lifted sentiment. At the midday break the Shanghai Composite index was up 0.91% at 2,897.74 points. Unemployment Rate in Hong Kong is expected to be 4.50% by the end of this quarter.

Philippine shares reversed course to end higher on Thursday on hopes the country would soon ease its coronavirus-driven restrictions while Thailand stocks fell on gloomy outlook for its economy. The Philippine benchmark gained 0.3%, recovering from a 0.7% fall earlier in the session after reporting an unexpected slowdown in first-quarter economic growth as the coronavirus pushes the economy towards a recession.

By the end of this quarter, the Australia S&P/ASX 200 Stock Market Index is expected to trade at 5305.75 points, The New Zealand Stock Market (NZX 50) is expected to trade at 10524.79 points. We estimate it to trade at 10055.67 in 12 months’ time.

The Japan NIKKEI 225 Stock Market Index is expected to trade at 19729.10 points, the China Shanghai Composite Stock Market Index is expected to trade at 2807.03 points. Our estimates for it to be traded at 2558.03 in 12 months’ time. The South Korea Stock Market (KOSPI) is expected to trade at 1905.03 with our estimates for it to trade at 1783.12 in 12 months’ time.

GDP Annual Growth Rate in Singapore is expected to be -6.9% by the end of this quarter, in 12 months’ time we estimate GDP Annual Growth Rate in Singapore to stand at 3.5% . In the long-term, the Singapore GDP Annual Growth Rate is projected to trend around 1.5% in 2021 and 2.1% in 2022. The Malaysia Stock Market (FBM KLCI) is expected to trade at 1371.42 points by the end of this quarter, we estimate it to trade at 1317.77 in 12 months’ time.

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