Risk Sentiment Edges Higher, As US Reportedly Mulls Rolling Back Some Tariffs on China

Risk-on sentiment is coursing through Asian markets, amid news reports that the US is considering lifting some of the tariffs currently imposed on $112 billion worth of Chinese goods
Han Tan

Asian stocks are mostly higher, while the Japanese Yen weakened by some 0.1 percent towards the 109 psychological level versus the US Dollar and Gold eased around 0.2 percent to trade closer towards the $1506 mark. The Chinese Yuan is edging higher against the US Dollar, while most Asian currencies are paring Monday’s gains.

Global equities have enjoyed a double-boost of late, with the ongoing US earnings season as well as optimism surrounding US-China trade talks helping stocks climb, although it remains to be seen whether such buying momentum can be sustained. If the US does roll back existing tariffs, the positive spillover will extend beyond financial markets, as such a move would alleviate the downwards pressures on global trade conditions as well.

Global economic outlook, sustained risk sentiment contingent on US-China limited trade deal

Still, until that keenly awaited “phase one” trade agreement is signed between the world’s two largest economies, investors may continue keeping their exposure to riskier assets in check. Investors are still very much aware of the toll that heightened trade tensions have exerted on the global economy, evidenced by the steady stream of contracting manufacturing PMI readings out of the US, Europe, and Asia. In order to preserve hopes of a global economic rebound, investors must be able to at least rule out the threat of more tariffs being imposed on world trade going into 2020, although it must be noted that such a risk has subsided significantly in recent weeks.

Oil boosted by risk-on mode, aided by softer Dollar

Brent futures climbed to its highest in six weeks and is closing in on its 200-day moving average, having breached the $62.50/bbl mark for the first time since September before moderating. The softer Dollar environment, coupled with the risk-on mood, have allowed Oil prices to pare recent losses, even as Brent remains more than 12 percent lower from its year-to-date high of $71.52/bbl on April 25.

If some of the existing tariffs were to be dismantled, that should restore some measure of global demand for Oil as economic and trade conditions recover. A significant de-escalation in US-China trade tensions would lift some of the gloom surrounding Oil’s outlook, while allowing OPEC+ to back away from having to trigger deeper supply cuts.

Open your FXTM account today

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.