Asian stocks rise on optimism for trade talks, shutdown deal

HONG KONG (AFP) – Asian stocks advanced yesterday on optimism over United States-China trade talks and a provisional deal to avoid a Washington shutdown, while the weak yen boosted exporters.

Negotiations are under way in Beijing aimed at averting a planned increase in United States (US) tariffs that could slow the global economy.

Top-level officials are set to arrive in the Chinese capital for meetings tomorrow and Friday, ahead of a March 1 deal deadline.

Investors responded positively to reports that Donald Trump wants to meet Xi Jinping “very soon”, just days after the US President had appeared to write off an imminent summit with his counterpart.

“Officials on both sides of the US-China trade talks expressed satisfaction with the progress thus far,” wrote Jeffrey Halley, senior analyst at Oanda, in a commentary.

Pedestrians walk past the closing rate of the Tokyo Stock Exchange displayed in the window of a security company in Tokyo yesterday. Tokyo stocks closed higher yesterday following reports that US lawmakers had agreed in principle to avoid a government shutdown, with the market also helped by a cheaper yen. – AFP

Washington is demanding changes from Beijing on what it says are unfair commercial practices.

Failure by the economic superpowers to reach an agreement would see US tariffs on USD200 billion worth of Chinese imports more than double.

Meanwhile, US lawmakers said they had reached an agreement in principle on border security.

The announcement assuaged fears of a chaotic repeat of the recent 35-day partial US government shutdown – the longest in the country’s history.

The agreement included USD1.4 billion in funding for a wall on the US-Mexico border – a key campaign promise of Trump.

News of the deal – which still needs to be accepted – came as the President stirred up border controversy at a raucous rally in the frontier city of El Paso.

Hong Kong edged up 0.1 per cent, while Shanghai gained 0.7 per cent. Sydney, Seoul and Taipei also rose.

Tokyo – returning from Monday’s public holiday – leapt 2.6 per cent, as Japanese exporters further benefitted from a resurgent dollar, which left the yen at its weakest level since the start of 2019.

The dollar has returned to early January heights, on the US currency’s longest unbroken rally in three years – despite the Fed recently changing course on interest rate hikes.

Investors have turned to the greenback as concern has built over poor growth forecasts and the health of other currencies in Europe and beyond.

Multiple central banks have fallen in line with the Fed’s dovish stance since it held interest rates unchanged two weeks ago.

The weak yen saw Tokyo-listed exporters such as Toyota, Honda and Nissan rise.

The British pound clawed back some losses after dropping sharply on Monday on dismal monthly GDP and manufacturing data, but the euro remained largely unchanged against the dollar.