Asian stocks rise and US treasury yields approach four-month highs

China hit back, saying it would levy tariffs on about $60bn worth of US goods, as previously planned, but cut the tariff rates.

While global market reaction to the latest phase of the trade dispute has been relatively limited, the US-China row was expected to heat up — a major worry for investors.

“In reaction to China’s latest retaliatory move, Trump is now highly likely to hit back by adding tariffs to another $267bn of Chinese goods. The trade war will only escalate,” said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities in Tokyo.

“It remains to be seen if China holds back its anger and still holds negotiations with the US. But if it opts not to, we’ll have to brace for the trade conflict dragging on into 2019.” US treasury secretary Steven Mnuchin invited top Chinese officials to a new round of talks, last week, but speculation has risen that Beijing would decline to attend in the fallout of Washington’s latest trade salvo.

Long-term us yields at four-month highs

Safe-haven US treasuries were sold and their yields rose as a result of improved investor risk appetite. The benchmark 10-year treasury yield stood at 3.049% after touching 3.059% overnight, its highest since May 23.

The rise in yields propped up the dollar in turn. The greenback climbed to a two-month high of ¥112.395 yen overnight and last traded at ¥112.300. The yen showed little reaction to the Bank of Japan’s well-anticipated decision on Wednesday to keep monetary policy steady.

The Bank of Japan also maintained its 10-year Japanese government bond yield target at about 0%. China’s yuan was little changed at 6.8601 per dollar in onshore trade after edging up 0.1% on Tuesday.

The Australian dollar, seen as a gauge of risk sentiment, brushed a two-week peak of $0.7235 after advancing nearly 0.6% on Tuesday.

The euro slipped 0.05% to $1.1663.

The pound shook off modest overnight losses and rose to $1.3175, its highest since July 26. Growing confidence that Britain and the EU can secure an agreement has encouraged investors to buy sterling.

Crude oil prices consolidated after rallying the previous day on signs that Opec would not be prepared to raise output to address shrinking supplies from Iran, and as Saudi Arabia signalled an informal target near current levels.

Brent crude futures slipped 0.1% to $78.94 a barrel following a rally of 1.25% on Tuesday. US crude futures lost 0.05% to $69.82 a barrel after surging 1.4% on Tuesday.

Reuters