Trade war: Stock markets in Asia jump on hopes of US-China deal

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Hong Kong’s Hang Seng index jumped nearly 4% while China’s Shanghai Composite and Japan’s Nikkei rose more than 2% in Friday afternoon trading.

The gains started after US President Donald Trump on Thursday talked up the prospects of a deal on trade with Beijing after speaking with Chinese leader Xi Jinping by phone. Trump said on Twitter that talks were “moving along nicely.”
Asian markets added to their gains after Bloomberg News reported early Friday afternoon in Asia that Trump has asked US cabinet officials to draft a possible trade deal with China ahead of a planned meeting with Xi at the G20 leaders summit in Buenos Aires later this month.

China’s beaten down currency, the yuan, also rose almost 0.3% against the dollar amid the buoyant mood. US stock futures were up nearly 1%.

The rally in Asian markets, which like many others suffered heavy losses in October, came despite a lack of details on how Trump aims to strike a deal with Xi.

The United States has so far slapped tariffs on over $250 billion of Chinese exports and is threatening more. China has retaliated with its own tariffs on more than $110 billion of US goods.

The Trump administration says it’s trying to pressure Beijing to make deep changes to its economic policies, accusing it of overseeing the theft of US intellectual property and unfairly boosting Chinese companies through aggressive industrial programs.

China’s efforts to get hold of American technology are “an existential threat” to the future of the US economy, according to US Trade Representative Robert Lighthizer.

Analysts are highly skeptical that China will agree to major changes that would address the US concerns — especially at such short notice.

“These are longstanding structural issues within the Chinese economy and cannot be reversed overnight,” said Logan Wright, Hong Kong-based director of China research at research firm Rhodium Group.

Investors may be letting their hopes get the better of them, according to some market watchers.

Michael Every, head of Asia financial markets research at investment bank Rabobank, said he suspected Trump’s upbeat comments were aimed at boosting market sentiment ahead of next week’s crucial midterm elections.

“This seems a perfect way to ensure equities rally into election day, put Xi into a box in terms of what is expected of him in the terms of the deal … and then have someone to blame when the deal then falls through,” Every said in an email.





Source : Nbcnewyork