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© Reuters. A visitor is seen as market prices are reflected in a window of the TSE in Tokyo
By Hideyuki Sano
TOKYO (Reuters) – Asian stocks hit a four-and-a-half month high on Wednesday as investors say Chinese and US trade negotiators will be able to reach an agreement to defuse their one-year-old tariff war.
The broadest MSCI share of Asia-Pacific equities outside Japan rose nearly 1.0% to its highest level since October 2nd.
Hong Kong rates hit a six-month high of 1.1%, while the Korean Kospi and Taiwan indexes returned to their lowest levels in early October. Japan gained 0.75%, its highest level in two months.
Chinese equities rose 0.4%, bringing gains to 18% from the low of January 4th, thanks to foreign inflows.
Earnings in Asia were higher than Tuesday's session on Wall Street, where they rose 0.15%, helped by the upbeat results of Walmart (NYSE :). The Nasdaq rose 0.19%, recording its seventh consecutive session of gains.
US President Donald Trump said Tuesday that trade talks with China were going well and hinted that he was willing to postpone the deadline for the completion of negotiations, saying that the 1st March was not a "magic" date.
US tariffs on Chinese imports worth $ 200 billion are currently expected to rise from 10% to 25% if no trade agreement is reached by March 1st.
Investors are now waiting for Trump to meet with Chinese President Xi Jinping next month, probably after China's annual congress meeting on March 5, to conclude an agreement or conclude a "memorandum of understanding". # 39; agreement. "
"They will probably agree that China imports more agricultural and agricultural products," said Nobuhiko Kuramochi, chief strategist at Mizuho Securities, adding that China "will also open some of its domestic financial services and possibly some sectors manufacturers ".
But he predicted that China "will not back down on the so-called structural problems." The two countries could perhaps agree to create a body to continue to debate these issues.The markets are already setting prices for these things".
The two countries have begun a new round of negotiations to resolve their trade war on Tuesday. Sessions at a higher level are scheduled later in the week. Vice Premier Liu He will visit Washington on Thursday and Friday.
BEHIND THE FED TURN
Investors are also considering next Wednesday's release of the Federal Reserve's January meeting, where policymakers announced they were no longer signaling any rate hikes or any adjustment to balance sheet normalization. .
New York Fed Chairman John Williams (NYSE :), told Reuters that he was comfortable with the current level of US interest rates and that he did not see the need to raise them unless economic growth or inflation returns to a higher speed.
But he also suggested that the balance sheet consolidation will continue at least in the year at its current pace, reducing speculation that the Fed could end the process this year.
In the currency market, the euro rallied to 1.1350 USD, rebounding from the low of 1.1234 USD recorded on Friday, due to improved appetite for the risk.
The dollar rose 0.2% to 110.80 yen, nearing the peak of 111.13 in seven weeks on Thursday.
The British pound climbed to 1.3063 USD Tuesday, gaining 1.09%, a decision attributed by some traders to the growing hope that Premier Theresa May is making progress in seeking changes in her deal on the Brexit with the European Union. It was $ 1.3070.
The rise rose more than 0.5% to 6.7243 per dollar, its highest level for about three weeks after Bloomberg announced Tuesday that the United States was seeking China's commitment not to Devalue their currency in yuan as part of a trade agreement.
The strength of the yuan also prompted bids for Asian currencies, with the Thai baht reaching its highest level in five years.
Oil prices hit the heights of 2019, supported by OPEC supply cuts and United States sanctions on Iran and Venezuela.
West Texas Intermediate (WTI) futures were $ 56.01 a barrel, down 8 cents from their latest settlement, but close to their $ 56.33 high. reached in 2019 earlier this week.
International futures were $ 66.33 a barrel, after peaking at $ 66.83 a barrel earlier this week.
Gold climbed 0.4% to its highest level in 10 months at US $ 1,346.50, prolonging its rise, partly due to signs that the world's central banks are in the process of to be dovish.
The yellow metal also raised concerns about the safety of Brexit, said Tatsufumi Okoshi, chief commodities economist at Nomura Securities.
Palladium rose 1.4%, reaching a new record, after rising about 19% since the beginning of the year, due to increased demand due to higher standards. 39, more stringent emissions.
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