Asian markets perked up by positive China-US trade
Asian markets enjoyed healthy buying interest Wednesday on much-needed good news on the China-US trade talks, while energy firms rallied with oil prices, though the pound remained beaten down by Brexit woes.
A flurry of positive developments in the tariffs stand-off between the world's top economies provided some early Christmas cheer on trading floors, fuelling hopes they can avert an all-out trade war.
Canada on Tuesday released on bail Meng Wanzhou, chief financial officer at Chinese telecoms giant Huawei, whose arrest last week sparked fury in Beijing and worries about a truce agreed at the G20 by Donald Trump and Xi Jinping this month.
Providing some extra support to the news of Meng's release was an interview in which Trump said he could intervene in the case if it helps seal a trade pact with China, adding: "Whatever's good for this country, I would do."
China added to market-friendly noise by saying it had agreed to cut tariffs on US autos to 15 percent from 40 percent - wiping out a levy imposed earlier this year in response to US measures.
Investors welcomed the headlines -despite news China had detained a former Canadian diplomat who served in Beijing - fuelling a surge in regional markets.
Tokyo ended the morning session 1.9 percent higher, while Hong Kong jumped 1.4 percent and Shanghai gained 0.3 percent.
Sydney rose 0.7 percent and Seoul jumped 1.3 percent, while Taipei and Wellington chalked up 0.8 percent gains.
"Last week, events seemed to conspire to throw the truce into disarray, but the underlying incentives of both sides at the moment are to try to maintain that truce," said Freya Beamish, chief Asia economist at Pantheon Macroeconomics, told Bloomberg News.
"Now we are seeing the possibility that China will come through with reductions of tariffs on US autos, and that’s another good, concrete step."
May on the precipice?
Car firms across Asia tracked gains in their US counterparts as the China tariffs news lifted optimism in the auto market with Hyundai three percent higher in Seoul while in Tokyo Toyota was up 2.4 percent in and Mitsubishi added three percent.
And energy firms were also well up after data showed a massive drop in US stockpiles, indicating a pick-up in demand to offset worries about a global supply glut that has hurt prices.
Both main crude contracts were more than one percent higher.
But it is not all rosy.
Prime Minister Theresa May, touring Europe to win help in pushing her Brexit deal through parliament after delaying a vote this week, was told she will not be able to renegotiate, leaving Britain facing an EU divorce with no deal.
The pound duly tanked two percent Tuesday and, with May facing a possible leadership challenge, the country another general election and the economy months of uncertainty, there are fears it could drop further.
No new date has been set for the key vote on her deal to be held.
"With no resolution within sight, the pound is likely to remain volatile for at least a few more weeks, if not months," said National Australia Bank senior strategist at Rodrigo Catril.
There was also unease in some quarters after Trump threatened to shut down the government if Democrats, who will control the House of Representatives from next month, do not meet his demand for $5 billion to build a wall between Mexico and the United States.
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