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Historical rivals New Delhi and Islamabad have agreed to build a visa-free corridor that traverses their heavily militarized border and promises to ease bilateral tensions. But political realities may limit any real progress toward reconciliation.

Called the Kartarpur Corridor, the five-kilometer passageway connects Sikh shrines from the Indian city of Dera Baba Nanak to the town of Kartarpur in Pakistan, allowing Sikhs in both countries to travel to places of worship across the border without a visa.

The confidence-building measure is a milestone for the historically tense relationship — Indian Prime Minister Narendra Modi recently compared the corridor with the fall of the Berlin Wall. It’s also a huge win for the regional Sikh community, which has long demanded the liberalization of travel to holy places. Sikhism is the fourth-largest religion in India, but in Muslim-majority Pakistan, it’s only practiced by a small segment of the population.

“Religious diplomacy — or using faith to bring people and nations together — has been very much part of Modi’s foreign policy in his outreach to the neighboring countries in the Subcontinent and beyond,” C. Raja Mohan, nonresident senior fellow at Carnegie India and a visiting professor at the National University of Singapore, said in a note.

Modi, who leads the Hindu nationalist Bharatiya Janata Party, tends to emphasize Hinduism as a uniting factor when he travels to Asian countries such as Nepal and Indonesia that have been influenced by the ancient religion. At home, however, the BJP’s right-wing rhetoric and policies have been linked to religious violence — mob killings and Hindu assaults on Muslims.

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Winning stocks, sectors in Australia Morrison election victory

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Australian shares rose to an 11-year high on Monday as Prime Minister Scott Morrison and the Liberal-led conservation government claimed victory at the national elections, after overturning opinion polls that had predicted a Labor victory.

Results on the Australian Electoral Commission’s website showed that Morrison’s coalition had won 77 seats out of 151 in parliament.

Bank, coal miners, property and healthcare stocks jumped, pushing the benchmark S&P/ASX 200 index to an 11-year high, after opening 1.7% higher and hitting its highest intraday level since 2007.

Those were among the sectors most affected by the campaign of the Labor Party, which had pledged to take strong action on climate change and property tax loopholes, for instance.

“A coalition win can be deemed a ‘surprise’ for investors and the upshot is that many tail risks that were potential consequences from what was a significant and wide reaching tax and policy reform agenda from the (Australian Labor Party) are now removed,” investment bank Morgan Stanley said in a note on Sunday.

Here are some sectors that jumped on Monday.

Coal miners

Coal stocks soared on news of Morrison’s victory.

Yancoal Australia surged 5.7%, New Hope jumped about 4%, and Whitehaven Coal rose about 2% on Monday morning.

The defeated opposition Labor party had ambitious targets for renewable energy, but Morrison rejected efforts to increase the use of renewables to generate electricity, arguing it would damage the economy which relies on coal-fired power and mining exports.

Climate change had been a divisive issue in the run-up to the election — and for years in the country. Battered by extended droughts, damaging floods, and more bushfires, Australian voters were expected to hand a mandate to the Labor party.

A coal pit of the Hazelwood coal-fired power plant stands in Hazelwood, Australia, on Thursday, March 30, 2017.

Carla Gottgens | Bloomberg | Getty Images

But the energy sector may yet see more uncertainty ahead, experts said.

“Given that several of the new centrist cross-bench members have promised strong action on climate change, we may see Morrison caught between his own party’s right-wing and the independents keeping the government in office,” said Sam Roggeveen, director of the Lowy Institute’s International Security Program.

The pressure on coal miners has probably eased, but a wait-and-see approach should be taken for energy policies, John Milroy, an investment advisor at Australian private wealth management group Ord Minnett, told CNBC Monday.

Banks

The financial subindex jumped more than 5% on Monday.

Shares of Australia’s biggest lender Commonwealth Bank of Australia jumped about 6% and National Australia Bank surged 6.63%. Australia and New Zealand Banking Group also rose 6.46%, while Westpac soared 7.16%.

The financial sector had been under tremendous pressure following an investigation into its practices, which exposed shocking revelations of wrongdoing in the sector. The Royal Commission — a government-appointed committee which led the investigations — later recommended a clean-up of the sector.

But analysts had suggested the Labor Party might have taken a harder stance on the banking sector, than Morrison’s coalition party.

“It’s all about the regulations, what markets are expecting might come from a harder line taken (from) the recommendations by the Royal Commission. That seems to have come off the banks today, with the likely success of the coalition government,” Milroy said.

Real estate

Labor had campaigned on a promise of closing tax loopholes for owners of investment properties, and that could have battered housing prices — already in decline — even more.

Following the election surprise, property-related stocks bounced.

Property classified ads company REA Group was up 7% and shares of its rival, Domain Holdings Australia, rose 3% in early trade. Construction firm Lendlease Group bounced about 1%, while property developer Stockland jumped over 4.5%.

Health care

Shares of the country’s biggest private health insurer Medibank Private were up 10%, while smaller NIB Holdings was up 9% in morning trading after the preliminary election results.

The Labor Party had pledged to limit the price increase of private health insurance premiums at 2% for two years, a move that would have weighed on the insurers’ earnings.

— Reuters contributed to this report.

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Google stops some business with Huawei, may hit smartphones business

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Richard Yu, chief executive officer of Huawei Technologies Co., speaks as he presents the P30 series smartphone during a Huawei Technologies Co. launch event in Paris, France, on Tuesday, March 26, 2019.

Marlene Awaad | Bloomberg | Getty Images

Google’s move to stop licensing its Android mobile operating system to Huawei could deal a huge blow to the Chinese tech giant’s ambitions to become the top player in smartphones globally.

The U.S. tech conglomerate has suspended business activity with Huawei that involves the transfer of hardware, software and key technical services. Google made the move in order to comply with Washington’s decision to put Huawei on the so-called “Entity List,” meaning American firms need to get a license to sell products to the Chinese firm.

It means Huawei can no longer license Google’s proprietary Android operating system and other services that it offers. Instead, Huawei is now only able to use a public version of Google’s operating system through the Android Open Source Project. It means future Huawei phones will not have the Google services that users have come to expect on Android devices.

“We are complying with the order and reviewing the implications,” a Google spokesperson said on Monday. “For users of our services, Google Play and the security protections from Google Play Protect will continue to function on existing Huawei devices.”

Huawei declined to comment when contacted by CNBC.

It’s a huge blow to the Chinese firm, which relies heavily on Android for the smartphones it sells outside of China. Within China, the company uses a modified version of Android that doesn’t have Google apps pre-installed because the search giant’s services are blocked there. But in markets outside of China, Huawei’s smartphones run Android complete with Google apps.

Just over 49%, of Huawei’s smartphone shipments in the first quarter of 2019 were to international markets outside of mainland China, according to Canalys. Huawei was the second-largest smartphone maker by global market share in the first quarter. The company has previously laid out its ambitions to become the top player in smartphones by 2020. But the latest move by Google could put a dent in that.

“It will be like an instant kill switch for Huawei’s ambition to overtake Samsung in the global market,” Nicole Peng, vice president of mobility at Canalys, told CNBC by phone on Monday.

Huawei relies on key components from several other American suppliers for everything from smartphones to its networking equipment. It counts over 30 American firms among its “core suppliers.” Some of those suppliers, including Qualcomm and Intel, have told employees they will not sell to Huawei until further notice, according to a Bloomberg report on Monday.

Is Huawei prepared?

Huawei, for its part, says it has been preparing for the sort of situation it now faces. In March, the company said that it had developed its own operating system for its consumer products if there came a time it was not able to use Google’s or Microsoft’s.

And just last week, the Nikkei Asian Review reported that Huawei told some suppliers six months ago that it wanted to build up a year’s worth of crucial components to prepare for any issues related to the U.S.-China trade war. Huawei has been developing its own chip technology, as well.

While Huawei has been able to reduce its reliance on American suppliers for some components, experts said that might not be enough because it still needs other parts from U.S. firms. And analysts have also cast doubt on the viability of Huawei’s own operating system.

Neil Shah, a research director at Counterpoint Research, said Huawei will have to rely on third-party Android app stores outside of China because Google Play will not be installed by default. That could be a problem.

“This makes a clear disadvantage for Huawei’s own (operating system) vs the Android (operating system) shipped on Samsung or other phones firstly in terms of lack of all the apps available on the Google Play store, quality of apps (some might be dated), potentially less secure as they will not be screened by Google or follows Google’s monthly secure patches and overall user-experience of the store,” Shah said.

“So all the apps from US players will not be available out of the box and users will have to sideload it or Huawei will have to make it available via third party or own branded Android compatible app store which is going to be a humongous task for Huawei,” he added.

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JP Morgan says prices are only supported in the near term

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Oil prices jumped on Monday after Saudi Arabia indicated a possible rollover of output curbs amid political supply risks, but that support is likely to be short-lived due to fundamental changes in the energy industry, an expert said on Monday.

“It’s alright to talk about supply-side risks, but that’s sort of near-term … I don’t think expectations for oil prices have actually gone up,” said Scott Darling, J.P. Morgan’s head of Asia Pacific oil and gas research.

That’s because of the rise of U.S. shale energy and slowing demand due to global economic uncertainties, Darling told CNBC’s “Squawk Box.” J.P. Morgan expects OPEC to extend its oil output cuts to 2020.

Oil prices jumped on Monday after Saudi Energy Minister Khalid al-Falih indicated there was a consensus among OPEC and allied oil producers to continue limiting supply.

Falih said the main option discussed at a ministerial panel meeting during the day was for a rollover of the output curbs agreed by OPEC and non-members in the second half of 2019. Still, he said, “things can change by June.”

OPEC, Russia and other non-member producers, an alliance known as OPEC+, agreed to reduce output by 1.2 million barrels per day from Jan. 1 for six months, a deal designed to stop inventories building up and weakening prices.

Brent crude futures were at $73.23 a barrel at 12:06 p.m. HK/SIN, up $1.02, or 1.4%, from their last close. Brent closed down 0.6% on Friday.

J.P. Morgan’s forecast for Brent crude is $75 per barrel by the end of the second quarter of 2019. For the full year, however, Brent crude will average $71 a barrel for 2019 and will weaken to $60 a barrel from 2021, said Darling.

Darling’s comments come as the market expects Iranian oil exports to drop further in May and Venezuelan shipments could fall again in coming weeks due to U.S. sanctions.

Moreover, tensions between Saudi Arabia and Iran are running high after last week’s apparent attacks on two Saudi oil tankers off the UAE coast and another on Saudi oil facilities inside the kingdom.

Riyadh accused Tehran of ordering the drone strikes on oil pumping stations, for which Yemen’s Iran-aligned Houthi group claimed responsibility. The UAE has blamed no one for the tanker sabotage. Iran has distanced itself from both sets of attacks.

The attacks come as the United States and Iran spar over Washington’s tightening of sanctions aimed at cutting Iranian oil exports to zero, and an increased U.S. military presence in the Gulf over perceived Iranian threats to U.S. interests.

Still, the current price support is likely short-lived due to the rise of U.S. shale energy, which has shortened the market cycle for oil, according to the J.P. Morgan expert.

“It’s difficult to make a case why oil prices materially move up from here,” said Darling.

—Reuters contributed to this report.

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