China Stocks extend gains for third day; eyes on US-China talks

Headline indices of the Mainland China equity market closed higher for third straight session on Wednesday, 20 February 2019, as investor risk appetite supported by a solid performance on Wall Street overnight and hopes for progress in US-China trade talks. At closing bell, the benchmark Shanghai Composite Index added 0.14%, or 3.83 points, to 2,759.48. The Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 0.33%, or 4.76 points, to 1,448.36. The blue-chip CSI300 index rose 0.3%, or 10.37 points, to 3,449.98.

The two countries (US-China) started a new round of talks to resolve their trade war on Tuesday, and sessions at a higher level are planned later this week. US President Donald Trump said on Tuesday that trade talks with China were going well and suggested he was open to pushing off the deadline to complete negotiations, saying March 1 was not a "magical" date. Tariffs on $US200 billion worth of Chinese imports are currently scheduled to rise to 25 per cent from 10 per cent if no trade deal is reached by March 1.

Investors will also look to the release on Wednesday of minutes from the Federal Reserve's January policy-setting meeting, where policymakers took a dovish turn, effectively signalling no further rate hikes. New York Fed President John Williams endorsed such an outlook, suggested he is comfortable with the US interest rate level and sees no need to raise them again unless economic growth or inflation shifts.

CURRENCY NEWS: China's yuan climbed up against the U.S. dollar on Wednesday. Prior to the market opening on Wednesday, the People's Bank of China (PBOC) set the midpoint rate at 6.7558 per dollar, 84 pips or 0.12 percent firmer than the previous fix of 6.7642. In the spot market, the onshore yuan opened at 6.7341 per dollar and rose to a high of 6.7182 at one point, its strongest level since Feb.1.

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