Asian Stocks Rise on Updates of US-China Trade Talks

Asian markets traded slightly higher on Monday. According to analysts, one reason is the positive development of the talks between the United States and China. The dollar also extended its gains.

Both United States and China agreed to hold off imposing tariffs, averting a potentially damaging trade war between them.

Japan’s Nikkei 25 rose 0.31 percent or 72.01 points to close at 23,002.37. The index crossed the 23,000 mark for the first time since February as the dollar firmed against the yen. Topix slightly edged lower by 0.083 percent or 1.50 points at 1,813.75 with declines seen in insurers and steelmakers. On the other hand, its machinery sector stocks surged.

Despite losses from its steelmaker sectors, the South Korean Kospi index climbed 0.20 percent or 4.92 points to close at 2,465.57. LG Electronics increased 0.71 percent or 700 points to 98,700 following the death of its chairman Koo Bon-moo.

Following positive trade development over the past weekend, China markets got a lift on the close. Hong Kong’s Hang Seng Index rose 0.60 percent or 186.44 points to close at 31,234.35. Strong performances from utilities, financial, and industrial sector led the climb.

Shanghai Composite climbed 0.64 percent or 20.54 points at 3,213.84, and the Shenzhen Composite added 0.87 points or 92.83 points to close at 10,765.35.

The S&P/ASX 200 slipped slightly by 0.048 percent or 2.90 points to close at 6,084.50, as materials and financials weighed.

Overall, MSCI’s index of shares in Asia-Pacific, excluding Japan, dropped 0.36 points or 9.56 points at 156.20.

The US dollar index stood at 94.021, compared to around 93.7 on Friday. 

Trade Talks

On Sunday, US secretary Steven Mnuchin said that both countries were ‘putting the trade war on hold’ as they agreed to work out on an agreement.

The US and China agreed to ‘substantially reduce’ the US trade deficit with China in a joint statement on Saturday. The statement stated that China would significantly increase its purchase of US goods and services, although it remained unclear how much that would cost.

Stephen Innes, head of Asia-Pacific trade at OANDA said, "The latest statement on the China-US trade suggests both parties are happy to avoid the dreaded tit-for-tat escalation while working towards a more market-friendly bilateral trade agreement.”

"The intentional vagueness delivered by both parties' statements suggests a great divide, but there's a hint of a consensus, nonetheless, to bridge that gap. So given the possible worst-case scenario was avoided the market should view the latest trade discussions as a favorable," he added.

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