Asian markets rally following China data, eyes on trade talks

Asian markets rose Monday as investors cheered data showing a surprise jump in Chinese factory activity, while oil prices bounced from last week's sharp losses after Iraq said top producers could announce a cut in output this week.

But while the week started on a positive note, worries about the trade talks were revived by China's Global Times newspaper saying Beijing wanted all US tariffs rolled back as part of a mini deal, a move observers said Washington is unlikely to agree to.

China said on Saturday that its manufacturing sector expanded in November for the first time in seven months, providing a much-needed boost to investors looking for signs of optimism in the world's number-two economy.

The news comes as Beijing and Washington put the final touches to a partial trade deal, the expected passage of which has helped global markets rally for weeks.

"This improvement in the manufacturing (purchasing managers index) is important because we can say with more certainty than at the beginning of the year that China's macro outlook is indeed stabilising," Aninda Mitra, senior sovereign analyst at BNY Mellon Investment Management, told Bloomberg News.

"A phase one-related pause, which seems to be around the corner, could herald the end of further, scheduled tariff hikes and the rollback of those imposed in September."
But OANDA senior market analyst Jeffrey Halley said: "It is hard to see the US swallowing a very bitter trade pill like that; it would, in effect, remove all of the US's leverage in the far more difficult comprehensive trade negotiations to come."
"It is now becoming more apparent why the talks have dragged on so long."