Global markets rally on reports Trump is ready to deal with China on trade

Photo by China Photos/Getty Images
  • News of potential trade breakthrough between the United States and China has sent risk assets across Asia sharply higher.
  • China’s benchmark Shanghai Composite Index had jumped over 2%, and has now rallied 8.8% from the low struck in October. The Hang Seng is up even more.
  • The news follows a series of positive remarks offered by Donald Trump and Xi Jinping in relation to trade negotiations on Thursday.

News of potential trade breakthrough between the United States and China has sent risk assets across Asia sharply higher.

According to Bloomberg, US President Donald Trump has asked key officials to begin drafting potential terms of a trade agreement with China, according to four people familiar with the matter.

Bloomberg says Trump is interested in reaching an agreement on trade with Chinese President Xi Jinping at the Group of 20 nations summit in Argentina.

On top of an apparent easing in trade tensions on Thursday, the news has been welcomed by investors across the region, especially in China.

The benchmark Shanghai Composite Index has soared 2.1%, extending its rally from the multi-year lows struck in October to 8.8%, while the Hang Seng in Hong Kong has jumped by an even larger 3.34%.

That’s seen major stock markets across the region lift sharply, at least among those that were still trading when the news broke.

Australia ASX 200 5849.20 , 0.14%
NZ NZX 50 8835.60 , -0.09%
Japan TOPIX 1657.51 , 1.56%
Shanghai Comp 2660.37 , 2.08%
Shenzhen Comp 1338.86 , 2.49%
HK Hang Seng 26263.72 , 3.34%
Sth Korea KOSPI 2088.22 , 3.15%
Sinagpore STI 3097.24 , 1.19%
Taiwan TAIEX 9869.5 , 0.25%
Philippines PSI 7140.29 , 1.77%
Indonesia JKSE 5830.20 , -0.10%
Malaysia KLCI Index 1706.93 , 0.00%
Thailand SET 1682.74 , 0.91%
India Nifty 50 10547.95 , 1.61%
S&P 500 Futures 2754 , 0.58%

The Chinese yuan is also rallying, as is the Australian and New Zealand dollars which are often sensitive to sentiment shifts towards the Chinese economy.

Beaten up emerging market currencies across the region are also trading sharply higher against the US dollar.

AUD/USD 0.7236 , 0.43%
NZD/USD 0.6677 , 0.35%
USD/JPY 113.04 , 0.30%
USD/CNY 6.9102 , -0.15%
USD/CNH 6.9020 , -0.21%
USD/HKD 7.8365 , 0.04%
USD/KRW 1121 , -0.27%
USD/SGD 1.3741 , -0.15%
USD/TWD 30.58 , -0.48%
USD/PHP 53.24 , -0.24%
USD/MYR 4.167 , -0.24%
USD/IDR 15050 , -0.50%
USD/THB 32.84 , -0.15%
USD/INR 72.83 , -0.84%
US Dollar Index 96.28 , 0.00%

On Thursday, Trump tweeted that he had a “long and very good conversation with President Xi Jinping of China”.

“We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina,” he said.

According to Chinese state media, Xi Jinping also said on Thursday that he hopes “China and the United States will be able to promote a steady and healthy relationship”.

“The two countries’ trade teams should strengthen contact and conduct consultations on issues of concern to both sides, and promote a plan that both can accept to reach a consensus on the China-US trade issue,” Xi said, according to CCTV state television.

It looks like the trade stalemate between the two sides is thawing, and markets are loving it.

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