SYDNEY, Sept 23 2019 : Asian shares started higher today on hopes of an interim Sino-U.S. tariff deal after the two countries described their talks as “productive” and “constructive”, while oil gained more than 1% as Middle East tensions remained elevated.
Australian shares added 0.4% while New Zealand’s benchmark index .NZ50 was 0.2% higher. South Korea’s Kospi .KS11 was a touch weaker after disappointing trade data, while Japan’s Nikkei .N225 was closed for a holiday.
That left MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5% at 511.28 points. It is up 3.4% so far in September.
The E-mini futures for U.S. S&P 500 ESc1 climbed 0.5% while Dow minis were up 0.46%.
The gains come after the U.S. Trade Representative’s office issued a brief statement characterizing the two days of talks with China as “productive.” It added that a principal-level trade meeting in Washington would take place in October, as previously planned.
China’s Commerce Ministry, in a brief statement, described the talks as “constructive”, and said they had also had a good discussion on “detailed arrangements” for the high-level talks in October.
“The two nations have continued to hold constructive talks. That’s helped the sentiment but the markets still remain unconvinced,” said Rodrigo Catril, senior forex strategist at National Australia Bank in Sydney.
Investors were still a bit jittery as news broke on Friday that Chinese officials unexpectedly canceled a visit to U.S. farms next week following their two days of negotiations in Washington.
“Trade tensions are likely to wax and wane ahead of U.S.-China October negotiations,” Citi analyst Cesar Rojas said in a note.
“Despite recent signs of a moderation in the pace of trade tensions escalation ahead of the October face-to-face negotiations, we continue expect U.S.-China trade tensions to continue.”
Action in currency markets was muted.
In commodities, Brent crude futures jumped 1.12%, or 72 cents, to $65 a barrel, while U.S. crude futures escalated 1.19%, or 69 cents, to $58.78 a barrel.
The Pentagon has ordered additional troops to be deployed in the Gulf region to strengthen Saudi Arabia’s air and missile defenses following an attack on Saudi oil facilities.
U.S. Secretary of State Mike Pompeo said yesterday the additional troops are for “deterrence and defense” and Washington aimed to avoid war with Iran.
With markets calmer since the Sept. 14 attacks on Saudi Arabian refineries, gold pulled back slightly.
Spot gold was off 0.25% at $1,512.8 an ounce. – Reuters