Asian Stocks Rise on Trade Talk Progress

Stock markets in Asia traded optimistically on Friday, as investors cheered for positive developments on the US-China trade talks.

MSCI’s broadest index of Asia-Pacific showed shares outside Japan were up 0.5%, while Japan’s Nikkei 225 gained 0.2%.

South Korea’s KOSPI index advanced 1%, whereas Australia’s S&P/ASX 200 surged 0.3%.

Chinese equities edged higher as well, with the Shanghai Composite climbing 0.4% and the blue-chip CSI 300 index adding 0.5%.

Hong Kong’s Hang Seng also rose by 1%.

Many players have taken a wait-and-see attitude given a lack of fresh trading cues ahead of US payroll data and other key events said chief investment officer Yasuo Sakuma.

But clearly, the mood is modestly positive, Sakuma added.

Stock trading in Europe followed, with the Stoxx 600 gaining 0.4%.

Germany’s and France’s main indexes were up 0.2% and 0.5% respectively.

Stocks Strengthen on Upbeat Developments on Trade Talks

The stock market’s buying mood was mainly driven by US President Donald Trump’s upbeat statement about the trade talks moving right along. Despite the uncertainty over whether existing tariffs should be withdrawn as part of an interim agreement to end a 17-month-long trade war.

Trump’s comments came after Beijing reiterated their view. They believe to seal a phase one deal the US must lift tariffs.

Completion of a phase one trade accord between the two countries had been initially expected this month, ahead of another batch of US tariffs due to start on December 15, which included $156 billion worth of Chinese imports.

Traders were hoping the world’s two biggest economies will close a deal to at least prevent the US from imposing its last set of duties.

The lack of certainty over a deal has led some players to not take part in recent sessions, while tension before the release of the US non-farm payrolls data later in the day might also keep a lid on stock market liquidity.

Furthermore, investors are awaiting the Federal Reserve’s policy meeting on December 10-11. Moreover, they are anticipating the upcoming December 15 deadline for the implementation of the US’s final group of tariffs.

Economists and analysts see the central bank leaving rates untouched at 1.50-1.75%.

Sakuma stated that expectations include the stock trading remaining quite strong, as traders have already employed safety measures against a potential decline in shares by purchasing put options.

Puts are usually utilized to hedge against weakness in stocks.

The put-to-call ratio of the Nikkei was at 2.0, its highest on record, according to a UK-based market data provider.

A higher ratio means better demand for puts.