Stocks rally as US-China trade war tensions cool
> US treasury secretary says both countries agreed to suspend tariff threats as they set up a framework to address future trade imbalances
TOKYO: Stocks rose yesterday after US Treasury Secretary Steven Mnuchin declared the US-China trade war “on hold” following their agreement to suspend the tariff threats that roiled global markets this year.
MSCI’s broadest index of AsiaPacific shares outside Japan advanced 0.45%, led by strong gains in greater China. Hong Kong’s Hang Seng was up 1.3%, Taiwanese shares 1.3%.
The Shanghai Shenzen CSI 300 gained 0.7%, hitting five-week highs. Japan’s Nikkei gained 0.4%. In Europe, stock markets climbed at the start of trading yesterday, with London’s benchmark FTSE 100 index up 0.5%.
In the eurozone, the Paris CAC 40 rose 0.2%. Frankfurt was shut for a public holiday.
Mnuchin and US President Donald Trump’s top economic adviser Larry Kudlow said the agreement reached by Chinese and American negotiators on Saturday set up a framework for addressing trade imbalances in the future.
“The weekend talks appear to have made progress. While they still need to work out details of a wider trade deal, it is positive for markets that they struck a truce,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
As safe-haven demand for debt fell, US bond prices were under pressure, keeping their yields not far from last week’s peaks.
The 10-year Treasuries yield stood at 3.076%, near a seven-year high of 3.128% hit on Friday.
“Recent data suggests the US economy is very strong, hardly slowing down in January-March. The world economy slowed in that quarter but it appears to be rebounding. And recent rises in oil prices are likely to lift inflation expectations further,” said Tomoaki Shishido, senior fixed income analyst at Nomura Securities.
“We expect more selling until the next Fed’s meeting in June,” he said. – Reuters, AFP