Asian markets rally as crucial Trump-Xi meeting approaches

Asian markets rose Thursday as investors brushed off Donald Trump’s latest dig at China and threat to impose more tariffs on the country’s goods if crunch talks with Xi Jinping fail this weekend.

Before setting off for the G20 summit in Japan, the president said in an interview that he had a “Plan B” in case the face-to-face talks show no progress, adding he would “take in billions and billions of dollars a month and we’ll do less and less business with them”, agency reports. He said Xi wanted to make a deal as “China’s economy is going down the tubes”.

His remarks on Fox Business Network came soon after Treasury Secretary Steven Mnuchin said the two sides were “90 percent” of the way to an agreement when talks broke down last month, with the US blaming Beijing for backsliding.

Still, observers said traders were taking the latest developments with a pinch of salt.

“The market is unreactive to these types of headlines given that Trump has continued to adopt a ‘good cop/bad cop’ strategy with… Mnuchin,” said Stephen Innes at Vanguard Markets. “Instead, market participants are content to wait for Saturday’s meeting to unfold where the proof will be in the pudding.

“A harmonious photo op could go a long way to soothing investors’ concerns at the market open on Monday.”

– Oil steps back after rally –

However, while there is optimism for an eventual agreement, analysts say they are not expecting anything major to come out of the Osaka meeting. OANDA senior market analyst Alfonso Esparza said: “The G20 is looking to be a disappointment to investors looking for a blockbuster trade deal to be announced and is now expected to yield a new round of talks between the US and China to be held later this year.”

And Eli Lee, head of investment strategy at Bank of Singapore, added: “Our baseline scenario is that both sides will commit to re-engage in trade negotiations while Trump puts the final round of tariffs on hold for a fewmonths.”

Hong Kong added 1.3 percent in the afternoon, Shanghai jumped 0.7 percent and Tokyo ended up 1.2 percent.

Sydney was 0.4 percent higher, Singapore rose 0.7 percent, Seoul put on 0.6 percent and Taipei jumped 1.1 percent. Wellington, Mumbai, Manila and Jakarta also rose.

In early trade London and Paris each rose 0.1 percent, while Frankfurt gained 0.5 percent. Regional energy firms enjoyed healthy interest after a rally in oil prices Wednesday fuelled by data showing US inventories had seen their biggest weekly drop since September 2016 owing to a dip in US production and improving exports. Brent rallied more than two percent and WTI shot up almost three percent on the news, though both edged down Thursday.

– Key figures around 0720 GMT –

Tokyo – Nikkei 225: UP 1.2 percent at 21,338.17 (close)

Hong Kong – Hang Seng: UP 1.3 percent at 28,592.08

Shanghai – Composite: UP 0.7 percent at 2,996.79 (close)

London – FTSE 100: UP 0.1 percent at 7,420.74

Euro/dollar: DOWN at $1.1355 from $1.1366 at 2050 GMT

Pound/dollar: DOWN at $1.2672 from $1.2685

Dollar/yen: UP at 108.14 yen from 107.78

Bitcoin: DOWN at $12,285 from $13,661

West Texas Intermediate: DOWN 31 cents at $59.07 per barrel

Brent North Sea crude: DOWN 37 cents at $66.12 per barrel

New York – Dow: FLAT at 26,536.82 (close)