Asia stocks gain on hopes for eased U.S.-China tension

TOKYO (Reuters) – Asian stocks gained early on Friday, as hopes for a thaw in the U.S.-China trade conflict fed investor appetites for risk assets.

FILE PHOTO: A man is reflected on an electronic board showing a graph analyzing recent change of Nikkei stock index outside a brokerage in Tokyo, Japan, January 7, 2019. REUTERS/Kim Kyung-Hoon

The Wall Street Journal reported on Thursday that U.S. Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a tariff rollback during trade discussions scheduled for Jan. 30.

U.S. stocks rallied following the report, but pared some of those gains after a Treasury spokesperson told CNBC that Mnuchin had not made any such recommendations. For the day, all three major U.S. indexes were up, led by a surge in industrial stocks. [.N]

Following Wall Street’s lead, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.25 percent. The index has gained nearly 1 percent this week.

Australian stocks rose 0.6 percent, as did South Korea’s KOSPI .KS11 while Japan’s Nikkei .N225 gained 0.7 percent.

“As with 2018, the U.S.-China trade row remains a key market theme in 2019. A slight difference is that there are some signs that the two sides are seeking some sort of a resolution,” said Soichiro Monji, senior economist at Daiwa SB Investments in Tokyo.

“China seems to be running low on options, while the United States would also want to avoid a prolonged conflict given the negative consequences on its markets and the economy,” Monji said.

Chinese Vice Premier Liu He will visit the United States on Jan. 30 and 31 for the latest round of trade talks aimed at resolving the bitter dispute between the world’s two largest economies.

In December, Washington and Beijing agreed to a 90-day truce in a trade war that has disrupted the flow of hundreds of billions of dollars of goods.

Indicators released recently have shown signs that the Chinese economy is losing some momentum.

China’s fourth-quarter economic growth, due to be reported on Monday, likely slowed to the weakest pace since the global financial crisis, a Reuters poll showed, as demand faltered at home and abroad.

In currencies, the dollar was mildly supported after U.S. Treasury yields rose amid the improvement in risk appetite in the broader markets.

The greenback was steady at 109.14 yen JPY= after popping up to a two-week high of 109.40 overnight. The dollar has gained about 0.6 percent against the Japanese currency this week.

The euro was little changed at $1.1392 EUR= after dipping slightly overnight. The common currency was on track for a weekly loss of 0.7 percent.

The 10-year Treasury yield US10YT=RR stood at 2.746 percent after going brushing 2.761 percent the previous day, its highest in three weeks.

The pound stood at $1.2984 GBP=D3, hovering close to a two-month peak of $1.3001 scaled overnight on the back of hopes that Britain can avoid a no-deal Brexit.

Prime Minister Theresa May’s Brexit deal suffered a heavy defeat in parliament this week but she survived a subsequent vote of confidence, removing some political uncertainty for now.

U.S. crude oil futures extended gains after rising the previous day on a rebound in Wall Street and news that OPEC sharply curtailed production in December. [O/R]

U.S. crude futures CLc1 added 0.13 percent to $52.14 per barrel. The contracts have gained 1.1 percent this week.

Editing by Richard Borsuk

Our Standards:The Thomson Reuters Trust Principles.

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