Asian Shares Rally On Trade Talk Optimism

Asian stocks posted strong gains on Friday after reports U.S. President Donald Trump has asked officials in his administration to start drafting a potential trade deal with Beijing.

Investors also looked ahead to the U.S. Labor Department’s closely-watched employment report for October due later in the day, with economists expecting employment to climb by 190,000 jobs in the month after an increase of 134,000 jobs in September.

The jobless rate is expected to hold at 3.7 percent. It will be the final jobs report before next Tuesday’s congressional elections.

China’s Shanghai Composite Index surged up 556.01 points or 2.7 percent to 2,676.48 and Hong Kong’s Hang Seng Index soared 1,070.35 points or 4.2 percent to 26,486.35 on easing trade tensions.

Japanese shares logged their biggest single-day gain since March as the easing of trade tensions helped lift shares of companies that have large exposure to China.

The Nikkei 225 Index jumped 556.01 points or 2.6 percent to 22,243.66, the highest closing level in nearly two weeks and marking the largest daily percentage gain since March. The Nikkei jumped 5 percent for the week, its best weekly gain since July 2016. The broader Topix Index closed 1.64 percent higher at 1,658.76.

Companies that benefit from Chinese demand led the surge, with Fanuc, Komatsu and Yaskawa Electric rallying 6-7 percent. Tech stocks such as Tokyo Electron and Advantest also soared 7-8 percent. Keyence Corp gained 11.3 percent after raising its annual dividend outlook.

Australian stocks recovered from an early slide to finish modestly higher, led by miners. The benchmark S&P/ASX 200 Index inched up 8.40 points or 0.1 percent to 5,849.20, while the broader All Ordinaries Index edged up 0.2 percent to 5,935.80.

Mining heavyweight BHP Billiton rallied 1.2 percent and rival Rio Tinto rose half a percent as base metal prices rebounded. Gold miners Newcrest and Evolution Mining climbed 2-3 percent after gold prices rose nearly 2 percent on Thursday.

Orica soared 6.4 percent after the explosive maker announced an increase in the final dividend from a year earlier.

Investment bank Macquarie Group jumped 9 percent after posting strong half-year results, while the big four banks fell between 0.6 percent and 1.2 percent.

Wesfarmers and Woolworths ended down less than half a percent after data showed retail sales in the country climbed 0.2 percent sequentially in September, falling below expectations for an increase of 0.3 percent. Infant formula maker Blackmores fell 2.2 percent.

A continued drop in oil prices caused energy stocks to suffer, with Santos, Woodside Petroleum, Oil Search and Origin Energy all falling over 1 percent.

South Korean stocks skyrocketed on easing trade tensions after Trump said that trade discussions with China were “moving along nicely.” The benchmark Kospi jumped 3.5 percent to finish at 2,096, led by large-cap stocks. Tech heavyweight Samsung Electronics advanced 4.7 percent and chipmaker SK Hynix added 6.3 percent.

Meanwhile, New Zealand shares finished marginally lower, snapping a five-day winning streak. The benchmark S&P/NZX 50 Index ended the session down 8 points, but gained more than 3 percent for the week.

Overnight, U.S. stocks rose to extend gains from the previous two sessions after Trump said he had a “long and very good” conversation with Xi on trade.

The Dow surged up 1.1 percent, the tech-heavy Nasdaq Composite soared 1.8 percent and the S&P 500 jumped 1.1 percent.

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