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Asian shares near 18-month high, bask in trade deal afterglow

SYDNEY: Asian markets idled near 18-month highs on Monday as trading volumes weakened ahead of the Christmas holiday break, with investors taking profit on gains made earlier this month.

In early European trades, the pan-region Euro Stoxx 50 futures STXEc1 and German DAX futures FDXc1 rose 0.1% each while those for London’s FTSE FFIc1 inched up a bit.

E-Mini futures for the S&P 500 ESc1 climbed to all-time highs having put on 2.7% for the month.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS hovered near its highest since June 2018, having risen 1.4% last week and more than 5% this month. For the final quarter of the year, it is up nearly 10% so far.

Global stocks were “basking in the afterglow of the U.S. China trade deal and continued encouraging signs of stabilization in the global growth slowdown,” said David Bassanese, Sydney-based chief economist at Betashares.

On Friday, the benchmark S&P 500 extended its run of record highs to seven straight sessions, its longest streak in more than two years. All three major U.S. indexes – the S&P 500, Nasdaq and Dow – notched up gains.

“While we’re entering 2020 with more hope than last year, as is always the case, there’s never any room for complacency,” Bassanese added.

Data on Friday showed U.S. growth nudged up in the third quarter, while there were signs the economy maintained its moderate pace of expansion as the year ended. Consumer spending was stronger than previously reported, and there were upgrades to business spending.

U.S. President Donald Trump gave markets more reasons to cheer on Saturday when he said the United States and China would “very shortly” sign their so-called Phase 1 trade pact.

Under the deal, the United States would agree to reduce some tariffs in exchange for a big jump in Chinese purchases of American farm products.

Further, China said on Monday it would lower tariffs on products ranging from frozen pork and avocado to some types of semiconductors next year as it looks to boost imports amid a slowing economy and a trade war with the United States.

During Asian hours on Monday, Japan’s Nikkei .N225 trod water after reaching a 14-month top last week. It was ahead by 2.3% for the month so far.

South Korea’s market .KS11 was down 0.1% after adding 5.5% so far in December. Chinese shares eased with the blue-chip CSI300 .CSI300 down 0.5% while Australian shares ended in the red.

The only major data this week is the U.S. personal consumption expenditure (PCE) deflator for November, due on Friday.

Action was muted in currency markets as well.

The euro EUR= held at $1.1078 after slipping 0.4% last week.

Sterling GBP= last fetched $1.3011, not far from Friday’s three-week low of $1.2976. It slid 2.6% last week for its worst weekly showing since October 2017.

The safe haven Japanese yen was treading water at 109.40. JPY= That left the dollar index .DXY barely changed at 97.667 against six major currencies.

In commodities, Brent crude LCOc1 was off 21 cents at $65.93 a barrel, while West Texas Intermediate crude CLc1 slipped 24 cents to $60.2 a barrel. Spot gold XAU= was slightly ahead at $1,480.62 an ounce.

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