Upbeat News Over Trade Talks Underpinning China’s Equity Markets

Although the higher-level trade talks are a positive development, they may be just enough to underpin the markets rather than send them to fresh near-term highs. Investors are not likely to jump the gun on any trade deal, however, which may lead to a sideways-to-lower trade. The general consensus is that if there is a trade deal with China by March 1, then Asian stocks will be the place to be in terms of equities.
James Hyerczyk
stock ticker
stock ticker

Asian stock markets are trading mixed on Friday following another session of steep declines on Wall Street. Investors are still showing a reaction to the quarterly warning from Apple that was a major drag on all the major U.S. indexes on Thursday. The quarterly guidance from Apple raised a red flag about the strength of the global economy.

At 0509 GMT, Japan’s Nikkei 225 Index is trading 19443.79, down 570.98 or -2.85%. Australia’s S&P/ASX 200 is at 5610.60, down 22.80 or -0.40%.

China’s Shanghai Index is trading 2509.02, up 44.66 or +1.81%. The South Korean KOSPI Index is at 2005.45, up 11.75 or +0.59% and Hong Kong’s Hang Seng Index is at 25390.46, up 326.10 or +1.30%.

Sellers returned to the market in Japan after a two-day bank holiday, driving almost all sectors lower. The positive moves in the Chinese mainland markets were in reaction to comments from the country’s commerce ministry. He announced that vice-ministerial level trade talks with the U.S. would be held on January 7-8.

Investors in China were also reacting to the release of positive data from China’s services sector. The Caixin/Markit services purchasing managers’ index jumped to a six-month high of 53.9 in December, rising from 53.8 in the previous month. The figure was significantly higher than the 50.0 mark which separates expansion from contraction. This news offset slightly the previously reported decline in its manufacturing sector for December.

This week’s two-sided trade is likely being fueled by below average liquidity and trading volumes.

Trade Talks May Bring Optimism to Stock Market

The United States and China will hold vice-ministerial level trade talks in Beijing on January 7-8, as both economic powerhouses seek an ending to the dispute that is inflicting increasing pain on both economies while instilling fear in the global economy.

A working team led by Deputy U.S. Trade Representative Jeffrey Gerrish will come to China to have “positive and constructive discussions” with Chinese counterparts, China’s commerce ministry said in a statement on its website.

The ministry said the two sides “confirmed” the dates in a phone call on Friday morning, but did not provide other details.

Earlier this week, President Trump said talks toward a deal are progressing well, but it is unclear if Beijing will yield to key U.S. demands over trade imbalances, market access, and alleged Chinese abuses of intellectual property.

On December 1, President Trump and Chinese President Xi Jinping agreed to hold off on additional tariffs for 90 days while they attempt to negotiate a deal. If a deal isn’t struck by March 1, Washington could proceed with a sharp hike in U.S. tariffs on Chinese goods originally set for January 1 and Beijing could retaliate.

There Will Be Opportunity in Asia

Although the higher-level trade talks are a positive development, they may be just enough to underpin the markets rather than send them to fresh near-term highs. Investors are not likely to jump the gun on any trade deal, however, which may lead to a sideways-to-lower trade. The general consensus is that if there is a trade deal with China by March 1, then Asian stocks will be the place to be in terms of equities.

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

Top Promotions

Top Brokers

IMPORTANT DISCLAIMERS
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.
RISK DISCLAIMER
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.
FOLLOW US