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Asian Shares Jump as Investors Await US-China Phase One Deal Signing

China’s blue-chip index closed at a near 2-year high on Monday, amid strength in technology shares, as investors turned optimistic ahead of the signing of the trade deal.
James Hyerczyk
Shanghai Stock Exchange.

The major Asia Pacific stock indexes closed mostly higher on Monday with the Australian market the lone loser. It was a relatively quiet night as far as volatility and economic data are concerned as investors awaited the signing of Phase One of a trade deal between the United States and China.

On Monday, Japan’s Nikkei 225 Index settled at 23850.57, up 110.70 or +0.47%. Hong Kong’s Hang Seng Index finished at 28954.94, up 316.74 or +1.11% and South Korea’s KOSPI Index closed at 2229.26, up 22.87 or +1.04%.

China’s Shanghai Index settled at 3115.57, up 23.28 or +0.75% and Australia’s S&P/ASX 200 Index finished at 6903.70, down 25.30 or -0.37%.

Phase One Trade Deal Signing

On Wednesday, U.S. President Donald Trump and Chinese officials are expected to sign the long-awaited phase one trade deal between the two economic powerhouses. China’s Vice Premier Liu He, who leads the Chinese negotiation team in the trade talks, is set to visit Washington from today, the country’s commerce ministry said.

The deal will involve some tariff relief, increased Chinese purchases of U.S. agricultural goods and changes to intellectual property and technology rules. Meanwhile, Washington and Beijing have agreed to hold semiannual talks in targeting to resolve disputes and push for reforms, according to a report by the Wall Street Journal, citing sources.

In other news, U.S. Treasury Secretary Steven Mnuchin said on Sunday China’s commitments in the initial deal were not changed during the translation process and will be released as the document is signed.

Phase Two Negotiations On Tap

Investors will also be looking at the next stage of negotiations to call a truce to the 18-month tariff spat between the world’s top economies. U.S. President Donald Trump said last month that talks on a Phase Two deal would be underway soon.

The second phase would focus on a key U.S. complaint that China effectively steals U.S. intellectual property by forcing U.S. companies to transfer their technology to Chinese rivals, Trump said in October. Analysts do not believe a deal would be reached before the November elections.

China’s Blue Chip Index Ends Near 2-year High

China’s blue-chip index closed at a near 2-year high on Monday, amid strength in technology shares, as investors turned optimistic ahead of the signing of the trade deal. Aiding sentiment was recent official rhetoric that called for bolstering of China’s capital market to propel its economy.

Australian Shares Tumble

Australian shares withdrew from record highs reached last Friday as investors expressed concerns over the longer-term risks in the Middle East. Meanwhile, the effect of deadly bushfires across the country weighed on investor sentiment.

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