Asian Stocks Surges on Trade War Easing Hopes

Asian stocks and its global peers boosted on Tuesday. On the other hand, safe-haven bonds retreated following U.S. President Donald Trump’s soft tone against China. And he believed the two countries could come up with a trade deal.

Aside from that, the pan-region Euro Stoxx 50 futures rose 0.25% in early European trade. Also, German DAX futures were up 0.24%, while Britain’s FTSE futures fell 0.3%.

On Monday, Trump revealed that Chinese officials communicated wit U.S. trade counterparts. And they talked about resuming the negotiations. But China refused to confirm this announcement.

As a result of his comments, it helped calm sharp losses in global markets. And this happened after the two largest economies announced new tariffs on Friday, the latest escalation in the lengthy trade conflict.

Now, going to Asian stocks, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3% following its 1.3% down the previous day. Similarly, Japan’s Nikkei was up 1%.

Then, the Shanghai Composite index rose 1.5%. And it had an additional lift from data revealing China’s industrial firms returned to profit in July. Also, Korea’s Kospi surged 0.4%.

As of now, equity markets seem to have a better footing. However, in the longer-term outlook of riskier assets, which repeatedly hit by trade concerns, stayed unstable.

Trade War

Chief Japan FX and equity strategist Shusuke Yamada stated that there will still be a tremendous amount to worry about when it comes to the U.S.-China trade war.

He added, “It remains difficult to foresee a resolution. And this will continue to weigh on equity market sentiment.”

Aside from the trade dispute, the equity markets need to watch closely on Brexit proceedings. And they should also keep an eye on the monetary policy of key players like the European Central and moves in the Chinese yuan, according to Yamada.