Asian Stocks Edges up Above Four-month High

Asian stocks bordered up to an above four-month high on Wednesday, boosted by optimism that the United States and China may be able to hammer out a deal to resolve their almost year-long trade argument.

Asian stocks market chart.

MSCI’s widest index of Asia-Pacific shares outside Japan increased as much as 0.5 percent to hit its highest level since early October.

Japan’s Nikkei average ascended 1.3 percent to mark an eight-week high, while South Korea’s KOSPI increased 0.5 percent.

China’s benchmark Shanghai Composite and the blue-chip CSI 300 advanced 0.4 percent and 0.6 percent, respectively, and Hong Kong’s Hang Seng was up 0.6 percent. Asia took its cue from U.S. stocks, where the Dow and Nasdaq each rallied around 1.5 percent overnight on optimism over U.S.-China trade talks and a tentative U.S. congressional spending deal to prevent another partial government stoppage.

U.S President Donald Trump said that he could see allowing the March 1 deadline for reaching a trade contract with China slide a few if the two sides were nearly a complete deal.

Administrators in Washington and Beijing had expressed hopes that a new round of talks which started this week would bring them closer to easing their seven-month trade war.

“We are currently seeing negative sentiment which had built up over trade concerns and U.S. fiscal issues being unwound,” said Soichiro Monji, senior economist at Daiwa SB Investments in Tokyo.

“For risk assets to move purely on optimism, the U.S.-China trade row will need to see some kind of a closure in March. A more permanent solution to avoid a U.S. government shutdown is also necessary. It has to be remembered that we are not there yet.”

U.S. congressional negotiators cobbled together a tentative two-party edge security deal late on Monday to prevent another partial administration stoppage. Nevertheless, Trump expressed disapproval with the contract and said he had yet to decide whether to support it.

The Cboe Volatility Index, U.S. stocks alleged “fear gauge”, fell to as low as 14.95, its lowest level in above four months, overnight.

With risk aversion fading for the time being, safe-haven government bonds were sold and their yields increased. The 10-year U.S. Treasury note yield extended an overnight upsurge and bordered up to a close one-week high of 2.694 percent.

The dollar was on the defensive as investors transferred their money to riskier asset in the midst of the U.S.-China trade-talk hopes.

The dollar index raised at 96.697 after its eight-day winning run came to an end overnight to push it away from a two-month top.

The euro was a shade higher at $1.1333 having increased 0.5 percent the preceding day, when it bounced from a three-month low of $1.1258.

The dollar was firm at 110.57 yen.

The kiwi dollar soared as much as 1.4 percent to a one-week high of $0.6829 after the Reserve Bank of New Zealand held the official cash rate at a record low of 1.75 percent and highlighted its neutral stance.

The central bank pushed back its forecasts for when it would hike rates to March 2021 from the September 2020 projected in its last statement in November.

In commodities, U.S. crude oil futures were up 1.0 percent at $53.64 per barrel after rallying 1.3 percent.

Oil prices raised on Tuesday after OPEC figures showed it cut production sharply in January, and as lead member Saudi Arabia said it would lessen its yield in March by an additional 500,000 barrels.

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