STOCK EXCHANGES – On Monday, while strong Chinese export and bank loan data enhanced the confidence in the global economy and hopes on the US-China trade talks are approaching a final lap, Asian shares nearly kicked its highest within 9 months.
Risk appetite has also been boosted, helping the dollar gain against major currencies.
Since July, shares of the MSCI’s broadest index of Asia-Pacific outside Japan scaled 0.6 percent to its highest. At the same time, the blue-chip CSI300 index grew 2.2 percent that led the progress of the Chinese shares.
The Hang Seng index in Hong Kong increased 1.2 percent with South Korea gaining 0.7 percent. Meanwhile, Japan Nikkei strengthened 1.4 percent, its highest since December.
In a note, an analyst at JPMorgan said, “Stocks bulls certainly have the wind at their backs with improving growth but steady inflation, reduced trade tensions and a solid/better-than-feared Q1 earnings season.”
In March, while new bank loans jumped by far more than expected, Chinese data showed that the exports have recovered to a five-month high.
US- China Trade Agreements
In a note, a global economist in the Bank of America Merrill Lynch, Ethan Harris said, “We expect a relatively market-friendly U.S.-China deal,” as investors received positive headlines regarding the Sino-U.S. trade talk.
He also added, “In our view, market and political concerns will constrain future fights. Think ‘skirmishes’ rather than ‘major battles.'”
U.S.-China trade agreement would go “way beyond” as stated by Steven Mnuchin on Saturday, and the prior efforts in opening China markets to US companies with hopes that the two sides will close its final round of negotiations.
On Monday, according to an exclusive news report, after strong resistance from Beijing, China curbed industrial subsidies as condition for a trade deal and toughened its demand by US negotiators.
This year as trade arguments and tighter financial conditions hit demand, investors worry and concerned about a global growth slowdown. For the third time in six months, the International Monetary Fund cut its outlook for the world economy.
If trade tensions between Beijing and Washington escalated further, fears about weakness in key economies could rise and could spread to other countries, especially if trade wars elevated.
A trade truce have been called by the Group of 20 industrialized nations as a result and it signals world leaders to prepare and act in restricting risks of a global economic slowdown.