Equity gains spread to Asia as trade worries ease

Sydney - Asian stocks rallied, following gains in US equities and the dollar, as concern eased on President Donald Trump’s proposed tariffs. The yen weakened and Treasuries held losses.

Japan’s Topix index surged as much as 2% and shares in Australia, Hong Kong and South Korea also gained. In China, small caps continued to outperform.

The S&P 500 Index advanced for a second day after hedge fund billionaire Ray Dalio called the threat of a trade war "political show" and House Speaker Paul Ryan urged the president to reconsider tariffs on steel and aluminium.

Ten-year Treasury yields hovered just below 2.90%.

"People are realizing a large trade war does not have consensus support, and decent leads last night in the US are driving global risk assets higher," Joshua Crabb, head of equities at Old Mutual Global Investors in Hong Kong, said.

Trump’s surprise announcement on Thursday that he intends to implement tough tariffs on steel and aluminium imports roiled global financial markets, though those concerns are being dialled back as investors speculate the president’s talk won’t translate into the most severe protectionist policies.

Trump kept pushing the protectionist stance in a series of tweets, even as leading Republican lawmakers and donors began to publicly question the wisdom of upending the global trading order.

Elsewhere, the Australian dollar edged higher after net exports data beat forecasts and the central bank gave an upbeat assessment of the economy as it left interest rates unchanged. West Texas oil advanced as a halt at Libya’s biggest crude field sparked speculation that supply will tighten and help reduce a global glut.

Here are some key events coming up this week:

The Chinese People’s Political Consultative Conference runs through March 15 and overlaps with the National People’s Congress meetings in Beijing, through March 20. Australia GDP data is due Wednesday.

The ECB isn’t expected to change policy on Thursday, but the Governing Council may discuss a change to pave the way for the end of quantitative easing.  BOJ monetary policy decision and briefing on Friday. US monthly payrolls data.

These are the main moves in markets:

Stocks

Japan’s Topix was up 1.5% and the Nikkei 225 Stock Average climbed 2% as of 1:54pm in Tokyo. Australia’s S&P/ASX 200 Index added 1.1%.  South Korea’s Kospi index advanced 1.4%.

Hong Kong’s Hang Seng Index rose 1.4%. The Shanghai Composite Index added 0.2%. Contracts on the S&P 500 Index were little changed.
The underlying measure rose 1.1%. The MSCI Asia Pacific Index climbed 1.2%.

Currencies

The Bloomberg Dollar Spot Index was flat. The euro rose 0.1% to $1.2347. The pound was little changed at $1.3840. The yen fell 0.1% to 106.29 per dollar, extending Monday’s decline.

The Aussie dollar climbed 0.1% to 77.73 US cents.

Bonds

The yield on 10-year Treasuries was steady at 2.88%. Australia’s 10-year yield climbed six basis point to 2.80%.

Commodities

West Texas Intermediate crude rose 0.2% to $62.67 a barrel after advancing 2.2% Monday. Gold was up 0.2% to $1 323.29 an ounce.