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Asia stocks in relief rally after China-US deal

AFP  |  Hong Kong 

Hong Kong and led a surge across Asian markets Monday after the agreed to suspend imposing tariffs on for three months, while soared on expectations of a big production cut.

In a much-anticipated meeting between and at the weekend, the heads of the world's two biggest economies hammered out a deal that will see them hold off on their tit-for-tat tariffs row, which has roiled global equities for most of the year.

The US will hold off raising levies on Chinese goods on January 1 while promised to buy more from the US and enter a 90-day period of talks to bring an end to the dispute.

If the negotiations, fail tariffs will jump from 10 per cent now to 25 per cent.

Trump hailed the meeting -- held on the sidelines of the in -- as "amazing and productive... with unlimited possibilities for both the and China".

The lit a fuse under Asian markets, with Hong Kong and each rallying more than two per cent, while the Chinese yuan, which has tumbled this year on worries about the trade row, jumped.

climbed 1.4 per cent by the break, and each rose 1.6 per cent, was 1.9 per cent higher and piled on two per cent.

"This is the best outcome that we had hoped for out of this meeting," said Frances Cheung, of macro strategy at Westpac Banking Corp.

However, while the early reaction was positive, observers warned there were still major issues that need to be resolved.

The "imposition of no new tariffs is not the same as retracing the existing tariffs that have come into play this year and will gradually have an impact on the US economy", said Kerry Craig, at

"Moreover, the ideology behind the trade tensions is still about strategic positioning of the two economies, which means until issues around and (intellectual property) are resolved, nerves will persist.

"We anticipate that things are still likely to get worse before they get better, and that the negative sentiment impact created by the trade narrative will create additional market volatility."

The also provided a boost to oil prices, which have been battered by concerns the trade war would hit demand for the commodity.

Adding to the buying support was saying Saturday that and had agreed to renew a pact on production cuts.

Both main contracts climbed more than four per cent, which provided a boost to regional with up more than three per cent in Hong Kong and up a similar amount in

Traders are now looking ahead to a weekend meeting of OPEC and key non-OPEC members, where they will make an announcement on how much they will cut and for how long.

"It's a huge week not only for but capital markets in general," said Stephen Innes, of trade at

"Post-sentiment is a bit more positive than expected but still very much work in progress, so perhaps the most crucial event in December next to (Britain's) Brexit vote could very well be the OPEC summit."

The upbeat sentiment sent higher-yielding and emerging market currencies higher against the dollar.

The Mexican peso was more than one per cent higher, South Korea's won jumped 0.5 per cent, the South African rand climbed 0.8 per cent and the Australian dollar put on 0.8 per cent.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, December 03 2018. 09:05 IST