- Risk appetite has been given a boost in Asian trade following the US-China trade developments over the weekend.
- Mining stocks are leading the ASX higher, while the Aussie dollar has surged ahead. US stock futures are also pointing sharply higher.
- AMP chief economist Shane Oliver said the weekend developments don’t guarantee a deal, but China’s approach was more conciliatory than earlier in the year.
President Trump and Xi Jinping’s weekend meeting has set off a positive ripple effect across Asian markets on Monday.
The two leaders came to a tentative truce on trade at the G20 summit, postponing the next round of tariffs and agreeing to a 90-day window for further discussions.
In response, risk appetite has surged in Asian trade. And a short time ago, Dow futures were up more than 1.9% as the positive sentiment looks set to extend to US markets.
The ASX immediately jumped by more than 1% at the open, led by gains in the resources and materials sectors.
At around 3pm AEDT, BHP was up almost 4% with sharper increases for Fortescue and South32.
Markets in Japan and South Korea opened at 11am AEDT and both indexes have also consolidated more than 1% higher in afternoon trade.
That was followed by Chinese stocks just after midday, which jumped at the open before climbing steadily.
Stocks in Shanghai went into the lunch break almost 3% higher, on track for their largest daily gain since a 4.09% rise on October 22:
There were similar gains in Hong Kong, with the Hang Seng index up 2.8%.
Currency markets have also responded, as the Aussie dollar roared higher this morning to reach its highest level against the greenback since August before easing back slightly.
According to AMP’s Shane Oliver, the latest attempt by the US and China to find middle ground “could still end in failure, like the other attempts at negotiation so far this year”.
However, he highlighted some positives from the weekend negotiations.
“China has indicated a preparedness to negotiate on issues like forced technology transfer, intellectual property protection and cyber intrusions that it hasn’t before,” Oliver said.
Specifically, Xi Jinping indicated that China would be open to approving a bid by the US-based chipmaker Qualcomm for NXP, after Chinese regulators blocked the deal earlier this year.
China also said it would purchase a “substantial” amount of US goods, and pledged to work with the US to make North Korea a nuclear-free state.
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