Asian markets rise as China and US agree to avert trade war
HONG KONG-Agence France-Presse
After high-level talks in Washington the two economic superpowers revealed a deal had been hammered out, ending months of tension that have sent financial markets into a frenzy.
U.S. Treasury Secretary Steven Mnuchin told Fox News on May 20 that "right now we have agreed to put the tariffs on hold" while Xinhua reported China's Vice Premier Liu He as saying "the two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other.”
While short on detail, the announcements provided much relief to investors, who had been fearing the imposition of levies on billions of dollars of exports between the two sides.
"The latest statement on the China-U.S. trade suggests both parties are happy to avoid the dreaded tit-for-tat escalation while working towards a more market-friendly bilateral trade agreement," said Stephen Innes, head of Asia-Pacific trade at OANDA.
"The intentional vagueness delivered by both parties' statements suggests a great divide, but there's a hint of a consensus, none the less, to bridge that gap. So given the possible worst-case scenario was avoided the market should view the latest trade discussions as a favorable."
Hong Kong rose 0.6 percent and Shanghai was up 0.6 percent. Tokyo added 0.3 percent as the weaker yen helped Japanese exporters.
Singapore added 0.8 percent and Seoul gained 0.2 percent, while Taipei rallied 1.3 percent. However, Sydney dipped 0.1 percent and Wellington shed 0.5 percent.
In early European trade London rose 0.4 percent and Paris added 0.3 percent. Frankfurt was closed for a public holiday.
The news also lifted the dollar, which had faced some selling pressure after Donald Trump earlier in the year imposed tariffs on steel and aluminum imports.
The greenback was sitting at its highest level against the euro since December, while it was at a four-month peak against the yen.
Traders are awaiting the release on May 23 of minutes from the Federal Reserve's latest policy meeting, hoping for fresh clues about its plans for raising interest rates.
Continuing improvement in the U.S. economy has fanned expectations the central bank will lift borrowing costs four times this year.