Asian markets rally as crucial Trump-Xi meeting approaches

HONG KONG (AFP) – Asian markets rose yesterday as investors brushed off United States (US) President Donald Trump’s latest dig at China and threat to impose more tariffs on the country’s goods if crunch talks with Xi Jinping fail this weekend.

Before setting off for the G20 summit in Japan, the President said in an interview that he had a “Plan B” in case the face-to-face talks show no progress, adding he would “take in billions and billions of dollars a month and we’ll do less and less business with them”.

He said Xi wanted to make a deal as “China’s economy is going down the tubes”.

His remarks on Fox Business Network came soon after Treasury Secretary Steven Mnuchin said the two sides were “90 per cent” of the way to an agreement when talks broke down last month, with the US blaming Beijing for backsliding.

Still, observers said traders were taking the latest developments with a pinch of salt.

“The market is unreactive to these types of headlines given that Trump has continued to adopt a ‘good cop/bad cop’ strategy with… Mnuchin,” said Stephen Innes at Vanguard Markets.

An investor monitors stock prices at a brokerage house in Beijing. – AP

“Instead, market participants are content to wait for Saturday’s meeting to unfold where the proof will be in the pudding.

“A harmonious photo op could go a long way to soothing investors’ concerns at the market open on Monday.”

However, while there is optimism for an eventual agreement, analysts say they are not expecting anything major to come out of the Osaka meeting.

OANDA Senior Market Analyst Alfonso Esparza said, “The G20 is looking to be a disappointment to investors looking for a blockbuster trade deal to be announced and is now expected to yield a new round of talks between the US and China to be held later this year.”

And Head of Investment Strategy at Bank of Singapore Eli Lee added, “Our baseline scenario is that both sides will commit to re-engage in trade negotiations while Trump puts the final round of tariffs on hold for a few months.”

Hong Kong added 1.3 per cent in the afternoon, Shanghai jumped 0.7 per cent and Tokyo ended up 1.2 per cent.

Sydney was 0.4 per cent higher, Singapore rose 0.7 per cent, Seoul put on 0.6 per cent and Taipei jumped 1.1 per cent. Wellington, Mumbai, Manila and Jakarta also rose.

In early trade London and Paris each rose 0.1 per cent, while Frankfurt gained 0.5 per cent.

Regional energy firms enjoyed healthy interest after a rally in oil prices on Wednesday fuelled by data showing US inventories had seen their biggest weekly drop since September 2016 owing to a dip in US production and improving exports.

Brent rallied more than two per cent and WTI shot up almost three per cent on the news, though both edged down yesterday.