Asian Stocks in Better Footing as Trade War Might Ease

The rising hopes on trade war easing were due to U.S. President Donald Trump changed his tone against China. And he foresees the two countries reaching an agreement. As a result, Asian stocks, with its global peers, rose last Tuesday while safe-haven bonds fell back.

Furthermore, according to Trump, Chinese officials reached out to U.S. trade counterparts to offer continuing negotiations. But this assertion was not confirmed by China.

Aside from that, the comments helped global markets to ease its sharp losses, which happened after the two sides announced their new tariffs on Friday.

Then on Asian stocks, MSCI’s broadest index of Asia-Pacific shares outside Japan, Japan’s Nikkei, Shanghai Composite index and South Korea’s Kospi all rallied in a range of 0.3% to 1.5% on Tuesday.

Trade Conflict on the Economy

Now, away from Asian stocks, chief market economist Yoshimasa Maruyama stated, “The trade conflict only increases the torment on the global economy.”

Then, China’s onshore yuan on Tuesday shove down to a new 11-year low of 7.1649 per dollar. And for this month, China allowed the tightly managed yuan to slip roughly 4% as trade dispute continues to escalate.

Also, because of the trade war, it fueled fears of a global currency war. And this is where countries decide to weaken their currencies in an attempt to lessen blows of a broader economic slowdown.

Maruyama said that the trade dispute between the U.S. and China is worsening. And also, he added that the two sides will surely negotiate. However, “prospects for a quick resolution have diminished greatly as neither side can back down.”

Then, going to the dollar, its gains supported a rebound in U.S. Treasury yields. And the dollar index firmed on Tuesday at 98.012 against a basket of six major currencies.

Also, after falling 0.4% on Monday, the euro stood at $1.100 on Tuesday.