Asian markets gain as U.S. and China agree to new trade talks - MarketWatch

Asian markets gained in early trading Thursday after an announcement that the U.S. and China will resume trade negotiations early next month.

Investors also were cheered by encouraging global developments, including British lawmakers seeking a less chaotic exit from the European Union and easing political tensions in Hong Kong.

China’s Ministry of Commerce announced early Thursday that the two sides will meet in Washington in early October. The U.S. and China have not held formal trade talks since July, when meetings in Shanghai ended with no progress.

The agreement came in a phone call conducted by the chief Chinese envoy, Vice Premier Liu He, with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, the ministry’s statement said.

Officials will “conduct conscientious consultations” in mid-September to prepare for the talks, it said. It gave no details but said the two sides wanted to create “favorable conditions.”

U.S officials told the Wall Street Journal they were cautiously optimistic, but taking a wait-and-see approach. But investors cheered the development, which comes after the latest round of tit-for-tat tariff hikes went into effect Sept. 1.

U.S. stock futures shot up after the announcement, with Dow Jones Industrial Average futures YM00, +0.88%  , S&P 500 futures ES00, +0.80%   and Nasdaq Composite futures NQ00, +1.12%   all up around 1%.

Japan’s Nikkei NIK, +2.12%   surged 2.3%, while Hong Kong’s Hang Seng Index HSI, -0.03%   rose 0.3%, as investors there wondered if new government concessions would put an end to months of protests. The Shanghai Composite SHCOMP, +0.96%   gained 1.5% and the smaller-cap Shenzhen Composite 399106, +0.93%   advanced 1.4%. South Korea’s Kospi 180721, +0.82%   rose 1.2%, while benchmark indexes in Taiwan Y9999, +0.93%  , Singapore STI, +0.52%   and Indonesia JAKIDX, +0.59%   all advanced. Australia’s S&P/ASX 200 XJO, +0.92%   rose 0.9%.

Among individual stocks, Japan Steel 5631, +6.67%   soared in Tokyo trading, while SoftBank 9984, +1.96%  , Sony 6758, +3.89%   and Fast Retailing 9983, +2.01%   posted solid gains. In Hong Kong, Apple component makers AAC 2018, +12.03%   and Sunny Optical 2382, +2.35%   rose, while property developers such as New World 17, -2.83%   and Link Real Estate 823, -2.35%   fell. Samsung 005930, +3.63%   jumped in South Korea, after announcing the long-delayed launch of its new foldable smartphone, and Taiwan Semiconductor 2330, +2.14%  advanced in Taiwan. Rio Tinto RIO, +1.83%   and ANZ Banking ANZ, +1.13%   gained in Australia.

Shares rallied on Wall Street on Wednesday, reversing Tuesday’s losses, when disappointing U.S. manufacturing data and an escalation in the ongoing trade war between the U.S. and China led to a sell-off that ended a three-day winning streak for the market.

The S&P 500 SPX, +1.08%   gained 31.51 points, or 1.1%, to 2,937.78. The Dow Jones Industrial Average DJIA, +0.91%  rose 237.45 points, or 0.9%, to 26,355.47. The Nasdaq COMP, +1.30%  , which is heavily weighted with technology stocks, climbed 102.72 points, or 1.3%, to 7,976.88.

Investors have been worried that the trade war and a slowing global economy could tip the U.S. into a recession. But traders set aside those concerns Wednesday, focusing instead on geopolitical developments.

In Hong Kong, the government withdrew an extradition bill that had set off three months of protests.

In Europe, Britain’s parliament took a big step toward passing a law that could stop Prime Minister Boris Johnson’s plan to pull out of the EU on Oct. 31 with or without a withdrawal agreement. Leaving the EU without a deal that covers trade and other issues could result in economic chaos for Britain and complicate trade with member nations in the EU.

The lingering trade conflict between Washington and Beijing has roiled markets this summer. The economic uncertainty has also become a drag on companies.

On Sunday, the conflict escalated as the U.S. imposed a 15% tariff on about $112 billion of Chinese products. China responded by charging tariffs of 10% and 5% on a list of American goods.

The escalation had been expected since early August when the U.S. announced plans for the new tariff measures, prompting China to retaliate.

After Thursday’s news of renewed trade talks, some analysts warned against too much optimism.

“While a drop in geopolitical risk premium comes as a welcome relief, but with the omnipresent trade war clouds looming ominously over the market threatening to come thundering down at any time, the air remains thick with caution,” said Stephen Innes, Asian Pacific market strategist with AxiTrader.

Benchmark crude oil CLV19, -0.21%   edged up 12 cents to $56.38 a barrel. It rose $2.32 to settle at $56.26 a barrel Wednesday. Brent crude oil BRNX19, +0.03%  , the international standard, gained 17 cents to $60.87 a barrel.

The dollar USDJPY, +0.13%   rose to 106.63 Japanese yen from 106.21 yen on Wednesday.

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https://www.marketwatch.com/story/asian-markets-gain-as-us-and-china-agree-to-new-trade-talks-2019-09-04

2019-09-05 03:39:00Z
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