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Global Markets: Asian shares, oil soar on Sino-U.S. trade truce

Reuters  |  SYDNEY/TOKYO 

By and Hideyuki Sano

SYDNEY/TOKYO (Reuters) - Asian shares rallied on Monday after U.S. and Chinese leaders brokered a truce in their trade conflict, a relief for the global economic outlook and a tonic for emerging markets and battered

Trade-exposed currencies led the early gains, with the Australian dollar notching a four-month peak, while the dollar dropped to one-month lows against the yuan.

E-Mini futures for the S&P 500 climbed as much as 1.9 percent. MSCI's broadest index of shares outside jumped 1.8 percent.

China's CSI300 index of and shares rose 2.6 percent. In Japan, the Nikkei gained 1.3 percent to a six-week high.

European shares are expected to follow suit, with futures for Britain's FTSE, France's CAC, Germany's DAX rising by 1.6 to 2.1 percent.

"Markets are opening with a knee-jerk boost to risk appetite but time will tell how enduring the optimism proves to be," said "There are already very different takes on what was achieved at the meeting."

"But for now, both sides can claim a win," she added. "Perhaps not insignificantly, it provides a window to export the soybean crop from key Republican states, at least."

and the agreed to halt additional tariffs in a deal that keeps their trade war from escalating as the two sides try again to bridge their differences with fresh talks aimed at reaching a deal within 90 days.

The said on Saturday that told Chinese during high-stakes talks in that he would not boost tariffs on $200 billion of Chinese goods to 25 percent on Jan. 1 as previously announced.

"Deeply contentious thornier structural issues such as remain unresolved," cautioned

"This U.S.-agreement is thus better characterised as a 'mini-breakthrough' that puts a momentary pause on trade tensions rather than a comprehensive policy deal."

Indeed, many market players doubt the two countries can bridge their differences that cover a range of issues within three months.

"Technology is becoming the main battle ground. It's not just a trade war any more. It's more like a technology war, in which we just found a temporary lull," said Hiroshi Watanabe, at

And on the whole, there is still uncertainty over the outlook for corporate earnings amid signs of slowing growth.

For now though, investors chose to see the glass as half full and lifted the Aussie dollar 0.75 percent to $0.7360.

The greenback eased against a basket of currencies to 96.993, but also firmed on the yen to 113.52. The euro added 0.3 percent to $1.1345.

The Mexican peso jumped more than 1 percent to 20.185, helped also by reports that newly sworn-in Mexican Andres Manuel Lopez Obrador may reverse his earlier plan to cancel construction of a new airport in the country's capital.

MSCI's emerging currency index rose 0.4 percent to its highest levels in almost 4 months.

The dollar had come under pressure last week when comments by Federal Reserve were interpreted by markets as hinting at a slower pace of rate hikes.

Powell was scheduled to testify on Wednesday to a congressional But the hearing is expected to be postponed to Thursday because major exchanges will be closed on Wednesday in honour of former U.S. President George H.W. Bush, who died on Saturday at the age of 94.

Treasuries rallied hard late on Friday to leave 10-year yields down at 2.99 percent before bouncing back to 3.035 percent early on Monday.

The progress on Sino-U.S. trade and an easier dollar provided some support to commodity prices.

Oil soared more than five percent, a positive start after it had posted its weakest month in more than 10 years in November, losing more than 20 percent as global supply outstripped demand.

Speculation is high the Organization of the Petroleum Exporting Countries (OPEC) and would agree some form of production cut at a meeting in on Thursday.

Brent futures rose $2.40 to trade at $61.86 a barrel, while U.S. crude gained $2.28 to $53.21, both on course to make their biggest daily gains in over two years.

soybeans climbed to their highest in almost six months, rising more than 2 percent at one point,

The gains were helped by a statement that said has agreed to buy an unspecified but "very substantial" amount of agricultural, energy,

Over recent months, the tit-for-tat retaliatory tariffs have drastically curbed U.S. soybean exports to China, by far the world's biggest bean importer.

(Additional reporting by in TOKYO; Editing by & Shri Navaratnam)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, December 03 2018. 15:27 IST