Asian Stocks Rise as Trade Deal Hopes Spark Again

TOKYO, Japan – The Asian stock market recorded gains early on Thursday as hopes over a trade deal between the US and China will be in fruition increases from the conflicting signals from the US President Trump.

Market players hope that the preliminary deal to end the trade war between the US and China for over a year will be reached sooner than later, keeping optimism in the market for today’s session.

The Asian stock market has been hit by the seemingly waning trade deal hopes since Monday, which caused Asian stocks to dip, but today is proving to be more optimistic for investors. This new turn for the market came after the report on Wednesday that stated President Trump’s previous remarks were taken not the exact way as it should, and the phase one of the US-China trade negotiations is still intact and close to reaching an agreement.

According to the head of investment strategy and the chief economist at the AMP Capital Investors, Shane Oliver, the two sides most likely to reach a deal, but the pressure towards reaching the deal is huge, especially because of the slowdown in the economy of both countries.

However, Oliver also said that there is still increased volatility in the market because of the constant policy uncertainty.

As market players leaned towards trade deal hopes, safe havens such as the Japanese yen declined and making way for riskier assets to rise.

The broadest index of MSCI in Asia-Pacific stocks outside of Japan recorded a 0.4% gain, while the Nikkei stock index in Japan also increased by 0.7%. Australian shares also tracked a 1% rise on stocks, while the blue chips in China and the Hang Seng index in Hong Kong both rose by 0.3%.

On the other hand, US stock futures were down by 0.04% on Thursday during the Asian trade session – a sharp decline from its 0.63% gains on Wednesday.

Analysts, however, have warned that any developments from the US-China trade agreement can create turbulence in the market going forward.

If the US and China cannot finalize a partial trade deal anytime soon, the next thing on the plate of market players is the new tariffs Washington is going to enforce towards Chinese goods on December 15, which was already confirmed by a US official.

Market players are also waiting for the closely-watched non-farm payroll numbers of the US that are due to be published on Friday, which will largely determine how the economy in the country is holding up as the global economy has slowed down.