Financial market research and analysis

Global equities are surfing on rising oil prices.

The Wall Street stocks climbed to fresh all-time highs.

Asia Pacific handed in a positive market, despite news that US President elect Donald Trump plans to quit the Trans-Pacific Partnership (TPP) trade deal from “day one” in office. The news came amid Trump announcing his policy plans for his first 100 days in office.

Nikkei and Topix added 0.31%, 0.32% respectively in Tokyo; Hang Seng index rallied 1.49%, Shanghai’s Composite gained 0.94%, while the ASX 200 surged 1.16%.

The FTSE 100 outperformed its European peers as the UK’s mining stocks, as well as oil and gas companies, soared at the London open.

Anglo American (+5.30), Glencore (+3.77%), BHP Billiton (+4.09%) and Rio Tinto (+3.00%)

Euro buyers lose conviction

The euro gains remained capped at 1.0650 against the US dollar. The single currency softened versus the pound, the yen and the franc, as European Central Bank (ECB) President Mario Draghi reiterated that the Eurozone’s monetary policy will remain loose to sustain the economic recovery. Draghi also urged action from Eurozone governments to address structural weakness in the area.

The clear divergence between the Federal Reserve (Fed) and the European Central Bank (ECB) hints at a further depreciation in the EURUSD, as soon as the short-term recovery is over.

How much could China profit from the TPP disintegration?

As promised during his election campaign, US President-elect Donald Trump will decidedly not leave the door open to foreign trade partners, not even for an extra day after he takes lead of the country.

The TPP-disintegration will change trade dynamics across the Pacific, as the treaty’s main engine (the US), will aim to build bilateral trade deals with its Pacific partners, which could benefit some countries, and hurt others.

Many analysts believe that China, which is not part of the TPP deal, could benefit from a Trump-lead change in the region. China’s main regional trade partners, such as Australia, Japan and Vietnam, would increasingly seek a tighter trade relationship with China, should they lose a part of their US market share. 

Nonetheless, should Donald Trump insist on raising Chinese import taxes up to 45%, the Chinese benefit would be nothing else than a slightly better scenario among the worst-case scenarios, given that the US stands for 25% of China’s total trades.