HONG KONG, China (AFP) — Asian markets mostly rose Tuesday on growing optimism that China and the US will sign a partial trade deal next month, while the pound held firm around five-month highs as dealers bet Britain will leave the EU with a Brexit agreement.
Donald Trump reinforced hopes Monday that he and Xi Jinping will be able to put pen to paper on a mini pact, saying China had already begun promised purchases of farm goods and that the first part of a wider commitment was almost complete.
“We’ll be able to, we think, sign a completed document with China on phase one,” Trump said at the White House, adding they would then move on to the next phases.
Trade Representative Robert Lighthizer said efforts were being made for it to be ready when the leaders meet at the APEC summit next month in Chile.
And Trump’s economics adviser Larry Kudlow indicated tariffs planned to go into effect in December could be cancelled if the talks go well.
Increasing signs of progress in the 18-month trade war provided some much-needed relief to global markets, with all three main indexes on Wall Street ending higher and Asia taking up the lead.
Hong Kong, Shanghai and Sydney each rose 0.2 percent, Singapore put on 0.8 percent and Seoul rallied 0.9 percent. Wellington, Taipei, Manila and Jakarta were also higher. Tokyo was closed for a holiday.
“Unlike previous trade talks where expectations centered on the view that something is better than nothing, this time around there appears to be a tangible and workable road map in place,” said AxiTrader senior market analyst Stephen Innes.
– ‘On the same page’ –
He said this was “supported by official confirmation that the US and China were both on the same page about the intent to work towards phase one of a ‘deal’ by mid-November”.
The “fact that phase two is even being discussed at this time… suggests that both the US and China may have finally found a bridge that isn’t too far”.
Traders are also keeping watch on events in London, where Boris Johnson will try on Tuesday to push his Brexit deal with the EU through parliament before next Thursday’s deadline.
Sterling rallied Monday to $1.3013 — its highest since May — but ticked back after House of Commons Speaker John Bercow refused the prime minister’s request to put his bill to MPs.
On Monday it edged back up against the dollar and euro.
And while many lawmakers say they need more time to read through the details, there is a growing expectation that the government can muster enough support to eventually push the bill through later Tuesday.
Still, with the vote likely to be tight, traders are moving cautiously.
“While markets haven’t seen fit to reverse last week’s optimism that saw sterling smartly higher, they aren’t yet prepared to take the pound up to the next level that successful passage of the Brexit agreement would presumably entail,” said Ray Attrill at National Australia Bank.
– Key figures around 0230 GMT –
Hong Kong – Hang Seng: UP 0.2 percent at 26,779.16
Shanghai – Composite: UP 0.2 percent at 2,944.26
Tokyo – Nikkei 225: Closed for a holiday
Pound/dollar: UP at $1.2982 from $1.2960 at 2100 GMT
Euro/pound: DOWN at 85.91 pence from 86.03 pence
Euro/dollar: DOWN at $1.1157 from $1.1145
Dollar/yen: UP at 108.69 yen from 108.60 yen
West Texas Intermediate: UP 16 cents at $53.47 per barrel
Brent North Sea crude: UP 12 cents at $59.08 per barrel
New York – Dow: UP at 0.2 percent at 26,827.64 (close)
London – FTSE 100: UP 0.2 percent at 7,163.64 (close)
© Agence France-Presse