The power of news headlines is back, and a renewed dose of trade optimism is finally lifting Asian stocks from a six-week low.
To be exact, the regional benchmark is heading for its biggest jump since Dec. 3, when the market reacted to US President Donald Trump and Chinese President Xi Jinping’s (習近平) famous dinner in Buenos Aires, and yesterday, it was again trade news that was providing the boost:
Huawei Technologies Co’s (華為) chief financial officer was granted bail on Tuesday, and Trump said he would intervene in the case if it would help win a trade deal with China.
The White House had spoken with the US Department of Justice about it, along with Chinese officials, he told Reuters in an interview.
There was more solid news on the trade front. Auto stocks, including Toyota Motor Corp, yesterday rose after a Bloomberg scoop that said there was progress toward easing the steep tariffs China imposed on US vehicle imports this year.
The MSCI Asia Pacific Index rose as much as 1.6 percent, and US stock-index futures moved higher after a choppy morning.
Japanese equities led the pack in Asia as the TOPIX index rallied and closed 2 percent higher, rebounding from Tuesday’s 18-month low.
Hong Kong stocks jumped, helped by a rally in developers shares.
In India, equities advanced as investors welcomed a quick appointment of a central bank governor who is expected to shift away from a hawkish view.
The market is coming back to life just as trading volume is poised to dwindle with the holiday season approaching. It is also a sign headlines on US-China trade talks can still have a big impact.
As Bloomberg macro strategist Cameron Crise said, the “stocks rally as optimism grows on China-US trade” narrative is one investors have been “binge-watching” all year.
The most bullish outcome is for a general decline in overall volatility instead of a “1 percent rally in Spooz overnight,” he added.
However, all of this does not mean that the market is out of the woods, said Stephen Innes, head of Asia-Pacific trading at Oanda Corp.
Traders should continue to be sellers of risk assets as solving trade tensions is likely to be a “one step forward and two steps back” process, Innes said.
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