Asian markets rise ahead of key meetings in China and US

Federal Reserve boss Jerome Powell's post-meeting comments will be pored closely watched for an idea about the bank's plans for 2019. (Photo: AFP/Mark Wilson)

However, there is still caution on trading floors after Friday's sharp sell-off fuelled by concerns over China's economy, and despite a tweet from Donald Trump suggesting a trade deal could be hammered out between Washington and Beijing.

While there are signs the world's top two economies are beginning to move towards a resolution in their bitter tariffs spat, there are increasing concerns about the global outlook following another dour set of indicators out of China.

A string of below-par readings this year have highlighted a slowdown in the Asian giant and observers are forecasting leaders will unveil fresh measures to pep up the economy, which is on course for another year of relatively weak growth.

A speech from President Xi Jinping on Tuesday to mark 40 years since China's economy began opening up will be closely watched, and that is expected to be followed by the start of a conference setting out the country's 2019 economic plan.

"We should expect a raft of stimulus measures from China policymakers in an attempt to stabilise the domestic economy," said Stephen Innes, head of Asia-Pacific trade at OANDA.

The Fed will conclude its rate-setting policy meeting Wednesday and while expectations are for another hike in borrowing costs, comments from chairman Jerome Powell will be closely watched for an idea of its plans for 2019.

'A LOT VOLATILITY'

In light of the China-US trade row and signs of weakness in the global economy, the bank has sounded a little more dovish in recent weeks, fuelling speculation it will slow down its pace of rate hikes - which has provided some much-needed support to equities.

"The upcoming (Fed) meeting and China's policy-setting meeting have been the most actively discussed topics around the markets," Innes added. "And both events have a smoothing effect on risk sentiment."

Shanghai climbed 0.2 per cent and Tokyo finished 0.6 per cent higher, while Sydney put on one per cent and Singapore jumped 1.2 per cent.

Seoul and Taipei each gained 0.1 per cent while Wellington added 0.3 per cent. There were also gains in Mumbai and Manila, though Hong Kong inched down marginally.

In early European trade London dipped 0.1 per cent, Paris dropped 0.3 per cent and Frankfurt eased 0.2 per cent.

Steve Goldman, fund manager at Kapstream Capital, told Bloomberg TV in Sydney that "we're going to see a lot of volatility" in the new year because of global uncertainty.

Hopes that China and the US can reach a deal to end their trade war were given a boost by Trump Friday, when he tweeted: "China wants to make a big and very comprehensive deal. It could happen, and rather soon!"

That came after China earlier in the day backed off fresh levies imposed this summer on US-made cars and auto parts.

While a full-blown deal is some way off, the developments have provided some hope to dealers.

On currency markets the pound remains bogged down around 20-month lows as Prime Minister Theresa May struggles to win concessions from EU leaders over her Brexit agreement, which a majority of lawmakers in Westminster oppose.

Facing growing calls for another referendum to break the deadlock, May is expected to tell MPs that such a move will do "irreparable damage" to British politics.

However, with her agreement all but dead in the water, there is a growing expectation Britain will leave the EU without a deal, which commentators warn could hammer the British economy.

- Key figures around 0820 GMT -

Tokyo - Nikkei 225: UP 0.6 per cent at 21,506.88 (close)

Hong Kong - Hang Seng: FLAT at 26,087.98 (close)

Shanghai - Composite: UP 0.2 per cent at 2,597.97 (close)

London - FTSE 100: DOWN 0.1 per cent at 6,839.45

Pound/dollar: UP at US$1.2584 from US$1.2582

Euro/dollar: UP at US$1.1319 from US$1.1303

Dollar/yen: UP at ¥113.42 from ¥113.39

Oil - West Texas Intermediate UP 12 cents at US$51.32 per barrel

Oil - Brent Crude: UP 12 cents at US$60.40 per barrel

New York - Dow: DOWN 1.7 per cent at 24,168.96 (close)