Hong Kong (AFP) – Asian stocks extended their rally Thursday on hopes for an easing of trade war tensions as China and the United States prepare for weekend talks. This optimism follows Donald Trump’s indication of a “major trade deal” later in the day. After the fireworks sparked by the US president’s “Liberation Day” on April 2, markets have enjoyed a period of calm in recent weeks, buoyed by the prospect that countries will reach agreements with Washington to avoid potentially damaging tariffs.
That sentiment was given a boost this week when Chinese and US officials announced that top negotiators would meet on Saturday and Sunday for their first negotiations since Trump unveiled his bombshell levies. US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will attend the talks in Switzerland, joining Chinese Vice Premier He Lifeng. The gathering has fueled hopes for a de-escalation of tensions between the world’s economic superpowers, which have seen Washington impose levies of 145 percent on China and Beijing retaliate with 125 percent tolls of its own.
Meanwhile, Trump posted on his Truth Social platform that he would announce “a major trade deal with representatives of a big, and highly respected, country” later Thursday. He did not specify which country he was referring to, prompting speculation on trading floors, with the New York Times suggesting it was Britain. The pound extended gains against the dollar in early Asian business.
Asian markets tracked advances on Wall Street, with Hong Kong, Shanghai, Tokyo, Sydney, Seoul, Wellington, Taipei, Manila, and Jakarta all in positive territory. However, the White House’s hardball approach to trade continues to cause anxiety. Federal Reserve boss Jerome Powell warned Wednesday that there is “a great deal of uncertainty” about where the administration’s policies will end up. Trump’s actions have sent shivers through world markets, fueling fears of a global recession and speculation about a reordering of the decades-old trading norms.
In a news conference following the Fed’s decision to hold interest rates steady, Powell stated: “If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment.” He acknowledged that the effects on inflation could be short-lived, reflecting a one-time shift in the price level, but also cautioned that it is “possible that the inflationary effects could instead be more persistent.”
The Fed’s post-meeting statement noted that “uncertainty about the economic outlook has increased further,” and that the chances of higher unemployment and inflation have also risen. Trump has recently criticized Powell for not cutting rates quickly enough, and last month markets were shaken by fears he might attempt to oust him. Analysts do not expect the central bank to move until July at the earliest.
“Recent job data, including last Friday’s non-farm payroll, indicate solid momentum, allowing the Fed to maintain its current stance,” said Tai Hui of JP Morgan Asset Management. “With only one more set of job data expected before the June 17-18 meetings, the likelihood of a rate cut in June is low. The Fed aims to assert its independence amidst pressure from President Trump to reduce rates, requiring significant deterioration in hard data to justify a cut.”
– Key figures at around 0230 GMT –
Tokyo – Nikkei 225: UP 0.2 percent at 36,863.15 (break)
Hong Kong – Hang Seng Index: UP 0.9 percent at 22,895.17
Shanghai – Composite: UP 0.1 percent at 3,345.57
Euro/dollar: UP at $1.1317 from $1.1301 on Wednesday
Pound/dollar: UP at $1.3347 from $1.3286
Dollar/yen: DOWN at 143.70 yen from 143.89 yen
Euro/pound: DOWN at 85.04 pence from 85.05 pence
West Texas Intermediate: UP 0.3 percent at $58.26 per barrel
Brent North Sea Crude: UP 0.3 percent at $61.27 per barrel
New York – Dow: UP 0.7 percent at 41,113.97 (close)
London – FTSE 100: DOWN 0.4 percent at 8,559.33 (close)
© 2024 AFP
