Asian shares take their lead from a firmer Wall Street

Tokyo — Asian stocks advanced on Thursday, tracking a surge on Wall Street, after the chair of the US Federal Reserve suggested it may be nearing an end to its three-year rate tightening cycle, boosting interest in riskier assets.

The dollar struggled and US treasury yields dipped after Jerome Powell said on Wednesday that US policy rates were “just below” neutral, less than two months after saying rates were probably “a long way” from that point.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8%.

The Shanghai Composite index edged up 0.2%, Australian stocks gained 0.5% and Japan’s Nikkei climbed 0.9%.

However, gains in Asia were tempered by investor jitters ahead of high-stakes trade talks between US President Donald Trump and his Chinese counterpart Xi Jinping on Saturday on the sidelines of the Group of 20 (G20) summit in Argentina.

Economists at ANZ pointed out that policy hawks in the Trump administration who want Washington to take a tough stance against Beijing appear to be in the ascendancy.

“They will want some concessions from China, not least of all on what they perceive is theft of intellectual property and forced technology transfer,” wrote the ANZ economists.

“Thus, it would seem the prospect of the Trump-Xi meeting ending without a sustainable resolution to their differences is relatively high.”

Analysts believe any signs of a thaw in US-China tensions could trigger a knee-jerk rally but say the move would likely be short lived unless there are substantive compromises from both sides — most notably if Xi can persuade Trump to postpone a sharp tariff hike on Chinese goods due to take effect January 1.

Source: businesslive.co.za