A series of tweets by Donald Trump playing up the chances of a trade deal with China provided a much-needed boost to Asian equities Wednesday but investors trod cautiously as analysts warned of more volatility to come.
After more than doubling tariffs on USD 200 billion of Chinese goods last week -- sparking a retaliation from Beijing -- Trump has threatened to hit a further USD 300 billion with more levies if he does not get his way in high-stakes talks.
"When the time is right we will make a deal with China", he wrote, adding that his "respect and friendship with President Xi is unlimited".
He went on to say: "We can make a deal with China tomorrow, before their companies start leaving so as not to lose USA business" and called on the Federal Reserve to "match" whatever the Chinese central bank does to support the US economy.
The remarks, while again accusing China of backsliding in the trade talks, provided some optimism and in early trade Shanghai was up 0.8 per cent while Hong Kong put on 0.6 per cent and Sydney rose 0.5 per cent.
However, Tokyo went into the break 0.8 percent lower.
"It's just too early to tell if this is a buy (on equity markets), on slightly oversold conditions, or if it's the start of stabilisation," Gina Martin Adams, chief equity strategist at Bloomberg Intelligence, told Bloomberg TV.
"Our working thesis is that we're going to be in for a period of volatility for most of the next month as we await the G20 meeting."
And OANDA senior market analyst Jeffrey Halley warned that "sentiment remains fragile and subject to the whims of trade headlines on either news tickers or social media accounts".
He added that while some gains could be expected "one suspects a lot of money will remain on the sidelines as we await more clarity on the trade situation".
"Trade issues will continue to cap gains in Asia, but if anything, the incidents on opposite sides of Saudi Arabia will bring home how vulnerable the flow of oil is from the Middle East," said Halley.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)