TOKYO, Jan 9 2019 : Asian shares inched up today, supported by optimism the United States and China can strike a trade deal to avoid an all-out confrontation that will severely disrupt the global economy.
Japan’s Nikkei .N225 rose 0.9 percent while MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.3 percent.
Wall Street’s S&P 500 .SPX gained 0.97 percent yesterday, extending its gains from 20-month lows touched around Christmas to more than 9 percent.
The United States and China will continue trade talks in Beijing for an unscheduled third day today, amid signs of progress on issues including purchases of U.S. farm and energy commodities and increased access to China’s markets.
Bloomberg also reported today that U.S. President Donald Trump is increasingly eager to strike a deal with China soon in an effort to perk up financial markets that have slumped on concerns over the trade war, citing people familiar with internal White House deliberations.
“Markets are scaling back some of their extreme nervousness after Powell effectively did some easing, with his words. But short-covering could run its course soon,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
“Hopes on U.S.-China trade talks are helping. Some sort of deals are likely to increase Chinese imports of natural gas, soybeans and so on from the U.S. Yet, it should be hard to resolve more structural issues such as intellectual property rights,” he added.
Oil prices also extended their rallies on hopes of progress in the trade talks.
U.S. West Texas Intermediate (WTI) crude oil futures rose above $50 per barrel for the first time in 2019 to stand at $50.17, up 0.7 percent.
In another sign of subsiding worries about the U.S. economic outlook, Fed funds rate futures have priced in a small chance of a rate hike this year, a sea change from late last week when a rate cut was almost fully priced in.
In the currency market, the dollar was little changed against major currencies.
Traders are looking to Trump’s prime-time televised address at 9 p.m. (0200 GMT today), where he is expected to make his case that a border wall is urgently needed despite opposition from Democrats.
That suggests the dispute on the issue, which has sparked a government shutdown since late December, is nowhere near a resolution.
Trump has considered declaring the border situation a national emergency, which could enable him to bypass Congress’ mandate to approve federal spending and to build the wall without its approval.
Such a step, however, would likely face an immediate legal challenge and could lead to further polarisation in the U.S. political environment. – Reuters