Market Overview

Asian Stocks Move Higher As Trade Talks Advance

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Asian Stocks Move Higher As Trade Talks Advance

Asian stocks were trading slightly positive Tuesday as optimism grows about the chances of a trade deal between the U.S. and China. There’s also optimism that the latest Brexit deal will be backed by the British Parliament.

What Happened

Hong Kong’s Hang Seng Index was up 0.21% as of 12:30 p.m. Hong Kong time, while Australia’s S&P/ASX 200 was trading 0.32% higher. The Shanghai Stock Exchange Composite Index was up by 0.8%, while the Korea Composite Stock Price Index in South Korea was trading higher by 1.1% at press time. 

The S&P 500 closed Monday trading close at a record high, having gained 0.69% during the day. The Dow Jones Industrial Average index closed with a 0.21% increase.

Why It Matters

The market's positive movement in the U.S. followed comments from President Donald Trump, saying that China has signaled that initial trade deal negotiations are progressing. It is raising expectations that leaders of the two countries will sign an agreement at a meeting in Chile next month.

White House economic adviser Larry Kudlow also said that the 15% U.S. tariffs on many consumer goods imported from China could be removed if trade negotiations keep advancing.

DS Investment & Securities analyst Na Jeonghwan said such tariff withdrawal would boost the sales of South Korean electronic manufacturers, according to Reuters.

Shares of electronic makers Samsung and SK Hynix were trading 1.8% and 2.2% higher, respectively, on the Korean stock exchange.

In the foreign exchange markets, the Euro last traded at $1.1151, while the pound sterling traded at a firm $1.2972. 

What's Next

Kim Mundy, a currency strategist at the Commonwealth Bank of Australia, said: “If the House of Commons vote in favor of the deal, GBP/USD could rally towards $1.3500 over the medium term. The UK would then enter a transition period that lasts until 31 December 2020.”

A rejection of the deal will likely see GBP/USD stabilizing around $1.2800 “because the risk of a hard Brexit will remain low,” he said. 

Posted-In: Brexit Commonwealth Bank of Australia Donald TrumpNews Global Top Stories Markets Media Best of Benzinga

 

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