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GLOBAL MARKETS-Asian shares pick up on U.S.-China trade deal hopes

Reuters | Updated: 11-11-2019 06:35 IST | Created: 11-11-2019 06:27 IST
GLOBAL MARKETS-Asian shares pick up on U.S.-China trade deal hopes
Image Credit: Pixabay

Asian shares edged higher on Monday after U.S. President Donald Trump said over the weekend that trade talks with China were moving along "very nicely", though uncertainty remained over whether a deal would be signed this year.

Japan's Nikkei was up 0.2% to inch closer to a recent 13-month high. Australian shares rose 0.5% to a two-week high while South Korea's KOSPI was off 0.2%. That left MSCI's broadest index of Asia-Pacific shares outside Japan 0.05% firmer at 534.63, testing a recent six-month peak.

Trump told reporters on Saturday that talks with China had moved more slowly than he would have liked, but added that Beijing wanted a deal more than he did. That was a more upbeat tone than just a few days earlier when Trump stressed that the White House would not agree to a full rollback of existing tariffs, remarks that hit stock prices and the dollar.

"Despite his bluster that 'China wants a trade deal more than I do', markets sense that Trump is likely quite keen to call a truce on what is becoming a serious U.S. economic risk heading into the 2020 election year," said David Bassanese, Sydney-based economist at Betashares. By the close of Wall Street on Friday, optimism had returned to the market as investors bet that Washingon needs a deal and it is in the interests of China, too. All three major U.S. indexes eked out record closing highs.

The Dow inched up a tad while the S&P 500 climbed 0.3% and the Nasdaq Composite added 0.5%. The record closing high by the S&P 500 was the fourth in six sessions as U.S. stocks rallied on hopes of a trade deal. In early Asian hours on Monday, E-minis for the S&P500 were barely changed.

"Focus this week will again be on any reports on U.S.-China trade negotiations," Bassanese said. "There is still a lingering risk that talks could fail once again, in which case the recent risk-on global sentiment could be quickly unwound." U.S. officials said a lot of work remained to be done when Trump announced the outlines of an interim deal last month, and Beijing has since pushed back on U.S. demands for big agricultural purchases, among other issues.

Analysts said the outlook for equities was highly dependent on U.S. economic data as a U.S.-China trade agreement would help bolster manufacturing and industrial sectors. Data on October U.S. industrial production and retail sales, along with the National Federation of Independent Business's monthly small business survey, are scheduled for release this week.

Reflecting growing economic optimism, the benchmark 10-year Treasury yield has moved well off its early September lows, and the yield curve between 3-month bills and 10-year notes has steepened. Safe haven gold was near a three-month low touched on Friday after posting its biggest weekly decline in a year. It was last up a touch at 1460.77 an ounce.

Benchmark Brent crude fell 9 cents to $62.42 a barrel while West Texas Intermediate (WTI) crude slipped 10 cents to $57.14 a barrel. In currencies, action was muted.

The dollar index was mostly flat at 98.346 as was the euro at $1.1023. The Japanese yen held at 109.19 while the Australian dollar stayed stuck at $0.6859.


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