James Hyerczyk
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Asian Shares

The major Asia Pacific stock indexes soared on Friday following news that the United States and China have agreed to a phase one trade deal in principle. The deal still has to be approved by President Trump.

A White House offer to scrap the next round of tariffs on Chinese exports to the U.S. that are set to take effect on Sunday, may have been the olive branch needed to bring China into agreement. Furthermore, Washington has also proposed slashing existing duties on $360 billion in Chinese products by 50%, sources told CNBC on Thursday.

On Friday, Japan’s Nikkei 225 Index settled at 24023.10, up 598.29 or +2.55%. Hong Kong’s Hang Seng Index closed at 27687.76, up 693.62 or +2.57 and South Korea’s KOSPI Index finished at 2170.25, up 32.90 or +1.54%.

China’s Shanghai Index settled at 2967.68, up 51.98 or 1.78% and Australia’s S&P/ASX 200 Index closed at 6739.70, up 30.90 or +0.46%.

Phase One Trade Deal Recap

The Trump administration has reached a phase one trade deal with China in principle, pending approval from President Donald Trump, three sources close to the talks told CNBC on Thursday.

Trump met with top advisors on Thursday about trade with China and whether to delay the next round of U.S. tariffs. Duties of 15%, set to take effect Sunday, would affect about $160 billion in Chinese-made goods including toys, computers, phones and clothing, according to CNBC.

The White House has offered to scrap those duties and slash some existing tariffs in half, two sources told CNBC. The U.S. proposed cutting existing duties on $360 billion in Chinese products by 50%, CNBC wrote.

Trump has focused on the U.S. agricultural products China will purchase as part of the deal, one of the sources told CNBC. China had committed to buying about $40 billion in goods, while the president wanted the figure closer to $50 billion.


Bank of Japan Tankan Survey Dives to Six Year Low

Japanese big manufacturer’s business mood sank to a near seven year low in the fourth quarter, a closely watched central bank survey showed, as the U.S.-China trade war and soft global demand weighed on the export-reliant economy.

Companies expect conditions to remain unchanged or even worsen three months ahead, the Bank of Japan’s “tankan” quarterly survey showed, suggesting that the fallout from the trade conflict could hurt broader sectors of the economy.

The headline index for big manufacturers’ sentiment stood at 0 in December, down from plus 5 in September and worse than a median market forecast of plus 2, the tankan showed on Friday. It marked the fourth straight quarter of decline and hit the lowest reading since March 2013, a month before BOJ Governor Haruhiko Kuroda deployed his “bazooka” monetary stimulus to pull Japan out of deflation.

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