US-China trade deal getting closer

Published September 26, 2019, 6:34 PM

by Rica Arevalo

By Agence France-Presse

HONG KONG – Asian markets rose Thursday following upbeat comments from US President Donald Trump that a trade deal with China could come sooner than expected and steps towards a new agreement with Japan.

Trump's upbeat comments on trade deals with China and Japan boosted markets (AFP Photo / MANILA BULLETIN)
Trump’s upbeat comments on trade deals with China and Japan boosted markets (AFP Photo / MANILA BULLETIN)

Trump, in an appearance at the United Nations, said a deal with China was getting closer, sending Wall Street higher despite concerns over the launch of an impeachment inquiry against the mercurial leader.

The remarks came just a day after Trump railed against Chinese “abuses” at the UN summit, comments that had been seen as among the factors causing stocks to fall Tuesday.

Trump on Wednesday also said Washington and Tokyo had taken a major step toward sealing a comprehensive new trade deal, which will see Tokyo cut tariffs on $7 billion of US farm exports.

“Investors have been ‘trade war’ bearish for so long that any sliver of optimism is cheered,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.

“However, with definite signs of a trade thaw emerging that trade calm certainly trumped the impeachment probe as the S&P 500 halted a three-day slide, the dollar rallied, and yields on 10 US Treasuries rose towards 1.75 percent.”

The Dow and S&P 500 both rose 0.6 percent while the Nasdaq closed 1.1 percent higher.

Asian markets were cheered by Trump’s positive comments on trade, with Tokyo rising 0.3 percent, Hong Kong adding 0.2 percent and Seoul up 0.4 percent. Shanghai was down 0.7 percent.

“Markets have been swayed by the president’s remarks every day… In the latest move, sentiment got a boost from the president’s positive remarks” on trade, said Makoto Sengoku, market analyst at Tokai Tokyo Research Institute.

“It eased worries for now that the spat would weigh on the global economy,” he told AFP.

Elsewhere, crude prices were little changed from Wednesday’s decline after an unexpected rise in US inventory and a swift recovery in Saudi Arabia’s output following the September 14 attacks on its oil infrastructure. Brent was flat and WTI was up 0.1 percent.

On forex markets, the pound was little changed. The British currency had pulled back after it rallied on Tuesday on the belief that the odds of a no-deal Brexit had fallen.

“With the political outlook ahead of Brexit murkier than ever and an election seemingly inevitable, any good news is well and truly baked into GBP now,” said Jeffrey Halley, senior market analyst at OANDA.

“It will probably take a Brexit agreement signed and sealed to give it new upside momentum.”