Asia stocks gain on US-China trade optimism

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.25 per cent.
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.25 per cent.PHOTO: REUTERS

TOKYO (REUTERS) - Asian stocks gained early on Friday (Jan 18), as hopes for a thaw in the US-china trade conflict fed investor appetites for risk assets.

The Wall Street Journal reported on Thursday that US Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a tariff rollback during trade discussions scheduled for Jan. 30.

US stocks rallied following the report, but pared some of those gains after a Treasury spokesperson told CNBC that Mnuchin had not made any such recommendations. For the day, all three major US indexes were up, led by a surge in industrial stocks.

Following Wall Street's lead, MSCI's broadest index of Asia-Pacific shares outside Japan added 0.25 per cent. The index has gained nearly 1 per cent this week.

Australian stocks rose 0.6 per cent, as did South Korea's KOSPI while Japan's Nikkei gained 0.7 per cent.

"As with 2018, the US-China trade row remains a key market theme in 2019. A slight difference is that there are some signs that the two sides are seeking some sort of a resolution," said Soichiro Monji, senior economist at Daiwa SB Investments in Tokyo.

"China seems to be running low on options, while the United States would also want to avoid a prolonged conflict given the negative consequences on its markets and the economy," Monji said.

Chinese Vice Premier Liu He will visit the United States on Jan. 30 and 31 for the latest round of trade talks aimed at resolving the bitter dispute between the world's two largest economies.

In December, Washington and Beijing agreed to a 90-day truce in a trade war that has disrupted the flow of hundreds of billions of dollars of goods.

Indicators released recently have shown signs that the Chinese economy is losing some momentum.

China's fourth-quarter economic growth, due to be reported on Monday, likely slowed to the weakest pace since the global financial crisis, a Reuters poll showed, as demand faltered at home and abroad.

In currencies, the dollar was mildly supported after US Treasury yields rose amid the improvement in risk appetite in the broader markets.

The greenback was steady at 109.14 yen after popping up to a two-week high of 109.40 overnight. The dollar has gained about 0.6 per cent against the Japanese currency this week.

The euro was little changed at US$1.1392 after dipping slightly overnight. The common currency was on track for a weekly loss of 0.7 per cent.

The 10-year Treasury yield stood at 2.746 per cent after going brushing 2.761 per cent the previous day, its highest in three weeks.

The pound stood at US$1.2984, hovering close to a two-month peak of US$1.3001 scaled overnight on the back of hopes that Britain can avoid a no-deal Brexit.

Prime Minister Theresa May's Brexit deal suffered a heavy defeat in parliament this week but she survived a subsequent vote of confidence, removing some political uncertainty for now.

US crude oil futures extended gains after rising the previous day on a rebound in Wall Street and news that OPEC sharply curtailed production in December.

US crude futures added 0.13 per cent to US$52.14 per barrel. The contracts have gained 1.1 per cent this week.