Asian stock markets started in a cautious mood on Thursday as investors hoped for progress in the latest Sino-U.S. tariff talks while bracing for China trade data t hat are expected to show further falls in both exports and imports.
There was some hope another U.S. government shutdown would be averted as President Donald Trump edged toward backing a deal in Congress on funding for a border barrier.
MSCI’s broadest index of Asia-Pacific shares outside Japan was all but flat, having just touched peaks last seen in early October.
Japan’s Nikkei edged up 0.3 per cent to its highest for the year so far as a weakening yen boosted export stocks.E-Mini futures for the S&P 500 added 0.1 per cent.
Chinese stocks were grabbing attention after the Shanghai blue chips index jumped 2 per cent on Wednesday to levels last seen in late September.
With Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer in Beijing for high-level talks, investors were daring to hope for good news.
Trump said on Wednesday the talks with China were “going along very well” as they try to resolve the tariff dispute ahead of a March 1 deadline.
“Investors are once again cautiously optimistic that progress will be made and realistically an extension of the tariff deadline will be seen as a good result,” SAID Nick Twidale, chief operating officer at Rakuten Securities.
“Longer term, only evidence of a solid deal going forward will dispel the investor caution and global growth fears that have been such a feature over the last year.”
Data showing U.S. consumer price inflation rose at the slowest annual pace in more than 1.5 years supported speculation the Federal Reserve could stay patient on rates and helped lift Wall Street.
The Dow ended Wednesday up 0.36 per cent, while the S&P 500 gained 0.30 per cent and the Nasdaq 0.26 per cent.
In currency markets, the improvement in risk appetite undermined the safe haven yen and propelled the dollar to its best levels of the year so far at 111.04.
The euro took a hit of its own from dire data on European industrial output which pushed long-term market inflation expectations to new lows, while putting downward pressure onbond yields in the bloc.
The single currency was last at US$1.1259 and testing the floor of a US$1.1213/1.1570 trading range that has held since mid-October.
Sterling was also on edge at US$1.1846 ahead of another parliamentary vote on British Prime Minister Theresa May’s Brexit plan.
All of which left the dollar firm on a basket of currencies at 97.243, near its highest since mid-December.
The dollar’s gains kept gold restrained at US$1,307.15 per ounce.
This content appears as provided to The Globe by the originating wire service. It has not been edited by Globe staff.