Asian stocks wary amid hope for progress in trade talks

Sydney — Asian stock markets were in a cautious mood on Thursday as investors hung on for any hint of progress in the latest China-US tariff talks amid reports the White House could extend the deadline for a deal.

Bloomberg reported President Donald Trump was considering pushing back the deadline by 60 days, citing people familiar with the matter.

Trump, on Wednesday, had said the talks were “going along very well” as they try to resolve the dispute ahead of the initial March 1 deadline.

With treasury secretary Steven Mnuchin and trade representative Robert Lighthizer in China for high level talks, investors had been daring to hope for good news.

As there have been disappointments before, the reaction in share markets was guarded. Shanghai blue chips were down 0.2%, having jumped 2% on Wednesday to levels last seen in late September.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.2%, although that was off a peak last seen in early October.

Japan’s Nikkei edged up 0.1% to its highest for the year as a weakening yen boosted export stocks. E-mini futures for the S&P 500 added 0.15%.

The Australian dollar, often used as a liquid proxy for China risks, gained 0.4% to $0.7114.

The Aussie had already got a small lift when Chinese trade data handily beat expectations in a welcome relief for the global economy.

Beijing reported exports rose 9.1% in January from a year earlier, confounding forecasts of a fall, while imports dipped by a surprisingly slight 1.5%.

There was some hope another US government shutdown would be averted as Trump edged toward backing a deal in Congress on funding for a border barrier.

Dollar best of a bad bunch

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 ¥111.05.

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 on bond yields in the bloc.

The single currency was last at $1.1280 and still above the floor of a $1.1213-$1.1570 trading range that has held since mid-October.

Sterling was also on edge at $1.1860 ahead of another parliamentary vote on British Prime Minister Theresa May’s Brexit plan.

All of which left the dollar near its highest since mid-December on a basket of currencies at 97.059.

In commodity markets, spot gold edged up 0.18% to $1,308.56/oz.

Oil prices found support as top exporter Saudi Arabia said it would cut crude exports and deliver an even deeper cut to its production.

US crude was last up 24c at $54.14 a barrel, while Brent crude futures rose 32c to $63.93.

Reuters