Posts Tagged ‘China-US trade’

White House Hosts China: John Bolton Meets With Yang Jiechi To Talk Trade, Security Issues

November 8, 2018

China State Councilor Yang Jiechi was in the White House for talks with the U.S. side in hopes of ending the trade war and tensions between the U.S. and China

Image result for Yang Jiechi, photos

South China Morning Post

 

A top Chinese diplomat said China and the United States must work for a solution to end their trade war and ensure an expected meeting later this month between their presidents yields result.

Yang Jiechi, a Communist Party Politburo member, made the remarks in a meeting with US National Security Adviser John Bolton at the White House, the Chinese foreign ministry said on Thursday.

The two met on Wednesday as the US midterm elections saw the Democrats win control of the House of Representatives and the Republicans expand their control of the Senate.

Bolton, who is widely seen as being hostile to China, vowed last month to further intensify the US’ tough approach on China, saying Beijing is a “major issue this century”.

In their meeting, Yang said the two countries had to properly manage their differences to ensure the effectiveness of talks between Chinese President Xi Jinping and his US counterpart Donald Trump on the sidelines of the G20 summit in Argentina.

“The nature of the China-US trade relationship is mutually beneficial. Both sides have to work out an acceptable solution through negotiations on an equal and mutually beneficial basis,” Yang was quoted as saying.

He said China and the United States should also step up military communications and cooperation against terrorism.

Yang described Taiwan was the most important and sensitive core issue of China-US relations, adding that Washington should abide by the one-China principle.

Image result for James Mattis and Chinese Defence Minister Wei Fenghe, photos
U.S. Defence Secretary James Mattis and Chinese Defence Minister Wei Fenghe  — Credit Sarah Zheng, South China Morning Post

Yang is in the US for a security and diplomatic dialogue, which starts on Friday. The dialogue will be attended by US Secretary of State Mike Pompeo, Defence Secretary James Mattis and Chinese Defence Minister Wei Fenghe.

The officials are meeting as tensions riddle ties between the two countries, from retaliatory tariffs to close military encounters in the South China Sea.

Nevertheless, Trump said last week that he would likely make a deal with China on trade, and the two nations had “very good discussions”.

https://www.scmp.com/news/china/diplomacy/article/2172225/united-states-must-work-end-trade-war-top-chinese-diplomat

Advertisements

Most Asian markets rally after a punishing October

November 1, 2018

Most Asian markets posted healthy gains Thursday, tracking another rally on Wall Street, with Hong Kong and Shanghai leading the way following a Chinese pledge to support the world’s number two economy

The healthy gains to kick off November come as dealers look to put behind them one of the worst months in recent years, which saw billions wiped from valuations and confidence battered.

While markets still face myriad problems, including rising US interest rates, the China-US trade war and uncertainty in the European Union, equities in Asia are enjoying a much-needed bounce.

Beijing provided the boost to Thursday’s business, with the leadership saying it will introduce new measures to kickstart the stuttering economy following a string of weak data, including growth at its slowest pace in nine years during the third quarter.

© AFP | China’s top brass has pledged measures to support the country’s stuttering economy, providing a lift to beaten-down equities

The yuan is also down at a 10-year low and approaching 7 to the dollar as uncertainty about China’s economy leads investors to take their cash out of the country.

The Politburo, after a meeting chaired by President Xi Jinping, said Wednesday in a statement: “The leadership is paying great attention to the problems, and will be more pre-emptive and take action in a timely manner.”

It said it would press on with a prudent monetary policy and provide help to private businesses, reiterating Xi’s recent comments that the private sector would not be sidelined.

The statement comes almost two weeks after the country’s top brass, including Xi, embarked on a full-throated drive to shore up confidence in the country’s stock markets and economy.

“Accepting slower growth has long been a challenge for Beijing, but now the rate of slowdown is firmly out of the comfort zone,” Katrina Ell, an economist at Moody’s Analytics in Sydney, said.

“In recent years the balancing act has been addressing risks in the financial system against pressure to stabilise economic growth. It appears the latter is again more of a priority.”

– Rupee in focus –

Shanghai jumped more than one percent, while Hong Kong climbed 1.5 percent and Sydney added 0.2 percent, with Seoul 0.7 percent higher. Singapore rallied one percent, Wellington put on 0.6 percent and Taipei 0.3 percent.

However, Tokyo eased 0.8 percent by the break on a stronger yen and profit-taking following a more than two percent surge Wednesday.

The broad advance came after all three main indexes on Wall Street chalked up a second day of solid gains.

In foreign exchanges the more optimistic tone helped high-yielding and emerging market currencies edge up.

The pound also managed to hold Wednesday’s small gains, which came on the back of hopes for a breakthrough in Brexit talks.

However, Alfonso Esparza, senior market analyst at OANDA, said: “Despite the assurances from some politicians that a deal is very close, the probability of a no-deal exit has actually gone up (and) the market remains unconvinced given there have been few details on the actual agreement.”

The Indian rupee will be in focus as speculation swirls that the country’s central bank chief is preparing to leave over a row with the government, with reports saying Delhi had tried to influence policy.

Finance ministry officials have sought to calm the row, saying it respected the Reserve Bank of India’s independence, which helped temper a drop in the rupee but the unit remains close to record lows touched earlier this month.

The government and the bank are believed to be at loggerheads over a number of issues including interest rates and how to respond to the plummeting rupee.

The rupee is hovering around 74 to the dollar, having started the year at 63.67.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.8 percent at 21,749.78 (break)

Hong Kong – Hang Seng: UP 1.5 percent at 25,361.66

Shanghai – Composite: UP 1.1 percent at 2,630.97

Euro/dollar: UP at $1.1331 from $1.1322 at 2030 GMT

Pound/dollar: UP at $1.2845 from $1.2771

Dollar/yen: DOWN at 112.76 from 112.86

Oil – West Texas Intermediate: DOWN 31 cents at $65.00 per barrel

Oil – Brent Crude: DOWN 34 cents at $74.70 per barrel (new contract)

New York – Dow: UP 1.0 percent at 25,115.76 (close)

London – FTSE 100: UP 1.3 percent at 7,128.10 (close)

AFP

Asian markets enjoy bounce but traders remain on edge

October 31, 2018

Asian markets staged a rare rally Wednesday following a bounce on Wall Street, with attention turning to the release of key US jobs data later in the week.

However, while investors briefly have a spring in their step, a mountain of problems — from China-US trade tensions and Brexit, to Chinese weakness and rising US interest rates — is keeping optimism at a premium.

October has been a painful month for Asian equities, which have seen billions wiped from their values, and observers warn of further pain with Washington and Beijing seemingly unlikely to back off from their tariffs standoff anytime soon.

© AFP | The pound is facing fresh downward pressure as officials struggle to reach a Brexit deal despite a deadline being just weeks away

Still, Wall Street put in a healthy performance Tuesday — the Dow added 1.8 percent while the S&P 500 and Nasdaq jumped 1.6 percent — after data showed US consumer confidence at a new 18-year high in October.

The positive reading sent the dollar up against the yen and the unit continued to rise in Asia, providing a push for Japanese exporters.

By the break the Nikkei in Tokyo was 1.6 percent higher.

In other markets Hong Kong added 0.9 percent and Shanghai jumped 0.8 percent.

In mainland China, data indicating a slowdown in manufacturing activity in October was offset by authorities’ support moves including tax cuts, measures to make it easier for firms to buy back shares and providing liquidity to markets.

– Sterling struggles –

Sydney edged up 0.1 percent, Singapore climbed 0.8 percent and Taipei soared more than two percent. Wellington and Manila each jumped 0.9 percent while Seoul added 0.3 percent and Jakarta gained 0.5 percent.

On currency markets the dollar, boosted by a healthy US economy and expectations of more Federal Reserve rate hikes, was also holding gains against the euro, which has been hit by weak eurozone growth, German political uncertainty and Italy’s budget row with Brussels.

The pound is at a near three-month low and facing fresh downward pressure as officials struggle to reach a deal for Britain to leave the European Union, with just weeks to go before a deadline.

A strong jobs report out of Washington Friday could provide more evidence for the Fed to hike rates and put further upward pressure on the greenback.

“The deadline for an orderly divorce between the UK and the EU is fast approaching and neither side seems ready to compromise, increasing the probabilities of a no-deal exit,” said Alfonso Esparza, senior market analyst at OANDA.

Oil prices edged up after plunging Tuesday in response to figures showing a sharp build in US stockpiles.

“US sanctions against Iranian exports kick off next week providing some support for energy prices,” Esparza said.

But he added that key drivers of the drop in prices has been the weak growth outlook “and a possible oversupply if Russia and Saudi Arabia, the de facto leaders of the production limit, increase their supply more than closing the gap left by lower exports from Iran”.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 1.6 percent at 21,790.00 (break)

Hong Kong – Hang Seng: UP 0.9 percent at 24,813.77

Shanghai – Composite: UP 0.8 percent at 2,589.08

Euro/dollar: DOWN at $1.1345 from $1.1346 at 2030 GMT

Pound/dollar: DOWN at $1.2706 from $1.2708

Dollar/yen: UP at 113.21 from 112.97 yen

Oil – West Texas Intermediate: UP 26 cents at $66.44 per barrel

Oil – Brent Crude: UP 40 cents at $76.31 per barrel

New York – Dow: UP 1.8 percent at 24,874.64 (close)

London – FTSE 100: UP 0.1 percent at 7,035.85 (close)

AFP

Fed rate rises, a trade war and US dollar dominance add up to a big headache for China

September 29, 2018

China is growing more vulnerable to capital outflow pressures – even with some tools at it disposal

South China Morning Post

PUBLISHED : Friday, 28 September, 2018, 2:03am
UPDATED : Friday, 28 September, 2018, 4:49pm

As the US Federal Reserve raises rates, there are growing concerns over capital flight and financial system meltdowns in emerging markets – and China, in the middle of an escalating trade war with the United States, is no exception.

This week the Fed raised interest rates for a third time this year, reaffirming its outlook for further gradual rises well into next year.

Countries from Argentina to Turkey have already been battered by higher interest rates in the US as US dollar-denominated assets became more attractive, triggering capital flight from those countries that have seen their currencies weaken against the greenback.

Watch: US trade war has little impacy on Chinese growth says Asian Developer

https://www.scmp.com/news/china/article/2166072/fed-rate-rises-trade-war-and-us-dollar-dominance-add-big-headache-beijing

Weighed down with US trade tariffs and a domestic debt overhang, China is vulnerable to capital outflow pressure and sell-offs. Already, Shanghai stocks have lost 15.6 per cent this year and the yuan has fallen by 9 per cent against the US dollar since April, an unprecedented pace of depreciation.

Anna Stupnytska, global economist at Fidelity International, said in a note that emerging market economies were already facing tighter financial conditions this year, “which have resurfaced some vulnerabilities as capital flows started reversing”.

“With the trade war rhetoric unlikely to de-escalate any time soon, the overall risks to US and global growth are clearly skewed to the downside,” Stupnytska said.

The strength and stability of the US dollar has made it the backbone of the world’s reserve currency system, maintaining liquidity and a safe haven status during times of volatility.

Despite Beijing’s constant complaints about the dollar hegemony over the past decade, the greenback is still the default choice for China’s trade settlement, and dollar-denominated assets account for about two-thirds of China’s total foreign exchange reserves.

As the trade war intensifies, China has again argued that the dollar’s anchor currency status – and not China’s trade practices – is the reason the US is running deficits in the goods and service trade with other countries.

In a white paper titled “The Facts and China’s Position on China-US Trade Friction” released this week, China argued that the US used “exorbitant privilege”, a term coined by former French president Valéry Giscard d’Estaing, to levy seigniorage – or profit – on all countries.

“For the US the cost for printing a hundred-dollar bill is no more than a few cents, but other countries will have to provide real goods and services in exchange for that note,” the report said.

“On the other hand, as a major global currency, the US dollar supports global trade settlements, and the US supplies US dollars to the world by way of a deficit. Therefore, beneath the US trade deficit lie profound US interests and the very root of the international currency system.”

China also argues that low savings and high consumption in the US economy means that the country has to run a deficit to attract a large amount of foreign savings. “The US trade deficit is an endogenous, structural and sustained economic phenomenon,” the white paper said.

Economists said the dollar’s status was a source of power for the world’s largest economy.

As long as you control the international financial system, you can ignore the rest of the world
YUKON HUANG, EX-WORLD’S BANK COUNTRY DIRECTOR FOR CHINA

Yukon Huang, senior fellow at the Carnegie Endowment and the former World Bank’s country director for China, said: “As long as you control the international financial system, you can ignore the rest of the world.”

But that dominance is not total.

The US dollar’s share of currency reserves reported to the International Monetary Fund dropped to a four-year low in the first quarter of US$6.499 trillion, or 62.48 per cent of allocated reserves.

It was the lowest level since it reached 61.24 per cent in the fourth quarter of 2013, according to IMF data. The share of the reserves in euro, yuan and sterling rose during the first quarter.

At the same time, Beijing has various tools at its disposal to avoid any exodus of funds or sharp depreciation in the yuan, including draconian controls over outbound payments and wider channels for inflows.

Frances Cheung, head of macro strategy for Asia at Westpac Banking, said demand for China’s onshore government bonds showed that investors were not losing confidence.

Chinese Premier Li Keqiang also promised this month that China would not use the yuan as a weapon in the trade war.

But while China can temporarily shield its financial markets from fallout from the Fed, it could lose an economic war if US dollar dominance continues.

“All America has to do to preserve its economic dominance is to grow 2 per cent a year for the next 20 or 30 years,” Huang said. “[This is because] America’s gross domestic product per capita is seven times as large as China’s. The gap between China and America just gets bigger and bigger.”

Additional reporting by Reuters

https://www.scmp.com/news/china/article/2166072/fed-rate-rises-trade-war-and-us-dollar-dominance-add-big-headache-beijing

Asian markets rally Friday with US economy, Wall St on growth optimism

September 28, 2018

Asian markets rose Friday, tracking a rally on Wall Street where investors were buoyed by the Federal Reserve’s positive outlook for the US economy, and oil added to gains with predictions it could be headed back to $100.

Friday – 28 September 2018 – 04H56

© AFP | The euro has taken a hit after Rome agreed a budget deficit target of 2.4 percent of gross domestic product for next year, fuelling fears of a conflict with Brussels

While concerns over the China-US trade row hang in the air, equities continue to be supported by optimism that the global economy and companies are in rude health.

That was reinforced by the Fed Wednesday as it lifted interest rates and indicated more to come over the next year citing the strong labour market and playing down concerns about vulnerabilities in the financial system.

“One thing that’s telling is the current price action which sees investors continually coming back for more. That suggests the gushing US economy and not trade wars, continues to influence investors’ decisions,” said Stephen Innes, head of Asia-Pacific trading at OANDA.

All three Wall Street indexes ended with gains and Asia followed suit.

Tokyo led the way, ending the morning 1.7 percent higher as exporters were boosted by the weaker yen, which is at its lowest level against the dollar this year.

Hong Kong added 0.5 percent, Shanghai gained 0.8 percent, Sydney rose 0.6 percent and Singapore climbed 0.7 percent. Wellington and Taipei each edged up 0.2 percent while there were also solid performances in Manila and Jakarta, though Seoul edged slightly lower.

– Euro struggles –

While the prospect of higher US rates has lifted the dollar, the upbeat mood is also helping emerging market and high-yielding currencies, which have been swiped in recent weeks by the trade war fears.

The South Korean won, Indonesian rupiah, Thai baht and Mexican peso were all being bought while the Turkish lira jumped more than one percent, despite ongoing concerns about the country’s economy.

The euro continued to struggle after losing almost one percent as Italy’s populist government agreed on a budget deficit target of 2.4 percent of gross domestic product for next year, fuelling fears of a bust-up with Brussels.

Crude prices extended gains on growing concerns about supplies following a decision not to increase output by key producers, just as Iran faces export sanctions and Venezuela continues to be dogged by political and economic crises.

Also, the US energy secretary this week ruled out using the country’s emergency stockpiles to ease a prices.

Bloomberg News reported that the chief executive of oil and gas major Total, Patrick Pouyanne, saw prices swinging to the $100 levels last seen in mid-2014.

“Everyone’s worried about the tightness in supply at the moment and that?s continuing to push up prices,” Will Yun, a commodities analyst at Hyundai Futures, said. “But volatility is coming as we?re still waiting for further response from the US.”

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 1.7 percent at 24,202.40 (break)

Hong Kong – Hang Seng: UP 0.5 percent at 27,852.25

Shanghai – Composite: UP 0.8 percent at 2,813.63

Euro/dollar: UP at $1.1644 from $1.1641 at 2100 GMT

Pound/dollar: DOWN at $1.3077 from $1.3078

Dollar/yen: UP at 113.55 yen from 113.39 yen

Oil – West Texas Intermediate: UP 17 cents at $72.29 per barrel

Oil – Brent Crude: UP 19 cents at $81.91 per barrel

New York – Dow Jones: UP 0.2 percent at 26,439.93 (close)

London – FTSE 100: UP 0.5 percent at 7,545.44 (close)

AFP

China to widen foreign access to A-shares

August 16, 2018

China’s securities regulator said it will allow individual foreign investors working in the country to buy and sell yuan-dominated Chinese A-shares, the latest incremental step by Beijing to widen access to its long-cloistered equities markets.

The change would go into effect on September 15 and also applies to foreign employees of Chinese-listed companies who are working for those firms outside the country, the China Securities Regulatory Commission (CSRC) said in a statement issued late Wednesday.

© AFP | China has taken its liberalisation steps partly due to foreign pressure, partly to help promote the maturation of its often volatile markets, and partly to increase the global profile of its yuan currency

Previously, foreign access to Chinese stocks has been largely through B-shares, which are denominated in foreign currencies and geared toward international investors, while only qualified foreign institutional investors could buy into the larger pool of A-shares.

But a number of steps in recent years have widened the door, including the establishment of programmes under which international investors on Hong Kong’s more open stock market can buy some shares on China’s exchanges in Shanghai and Shenzhen, and vice-versa.

A similar connection between London’s exchange and the mainland Chinese bourses also has been proposed.

In June more than 200 Chinese companies debuted on the emerging market index compiled by MSCI, which is expected to lead to billions of dollars of new investment in those Chinese shares by global funds that match their portfolios with MSCI’s indices.

The CSRC said the move was being taken to “deepen the opening up of the capital market, enrich the investment sources in the capital market, broaden channels for capital access, and optimise the structure of the capital market.”

China has taken its liberalisation steps partly due to foreign pressure, partly to help promote the maturation of its often volatile markets, and partly to increase the global profile of its yuan currency.

China has made additional liberalisation pledges since the US administration of President Donald Trump began pressuring Beijing to open its markets.

The China-US trade confrontation has pressured Chinese stocks this year, pushing the Shanghai index to its lowest levels in around two and a half years.

AFP

China’s trade surplus with US swells in June

July 13, 2018

China’s surplus with the US swelled in June, data showed Friday, likely stoking tensions with Donald Trump, who has imposed tariffs on billions of dollars of Chinese goods citing unfair trade practices.

The increase came as total trade between the world’s top two economies rose 13.1 percent for the first half of the year, despite the face-off, which has seen tit-for-tat tariffs on billions of dollars worth of goods and warnings of more to come.

China’s surplus with the US rose to $133.8 billion in January-June, and a record $28.97 billion last month.

© GETTY IMAGES NORTH AMERICA/AFP | The trade imbalance is heart of Donald Trump’s anger at what he describes as Beijing’s unfair trade practices that are hurting American companies

The imbalance is at the heart of Trump’s anger at what he describes as Beijing’s unfair trade practices that are hurting American companies and destroying jobs.

But on Thursday, China blamed those problems on the US, saying the trade imbalance was “overestimated” and caused by “domestic structural problems” in the United States, in a statement from the commerce ministry.

Bilateral trade between China and the US was booming last month during the exchange of trade threats between Beijing and Washington, Chinese official customs data showed. China exported US$217.7 billion of goods to the US in the first half of 2018, up 13.6 per cent year-on-year. Photo: Bloomberg

“This trade dispute will definitely have an impact on China-US trade and will have a very negative impact on global trade,” said customs administration spokesman Huang Songping at a briefing Friday.

With the wider world, China’s exports rose 11.3 percent on-year in June, beating a Bloomberg News forecast of 9.5 percent, while imports increased 14.1 percent, below the forecast 21.3 percent.

AFP

See also:

China reports record surplus with US and exports growth before July 6 tariffs kick in

https://www.scmp.com/news/china/economy/article/2155113/china-reports-record-surplus-and-strong-exports-growth-us-july-6

See also:

China makes $8.46 from an iPhone. That’s why a U.S. trade war is futile

https://www.cbsnews.com/news/china-makes-8-46-from-an-iphone-and-thats-why-u-s-trade-war-is-futile/

Related:

Asian markets mixed as trade deal euphoria abates

May 22, 2018

Asian investors took a step back on Tuesday after the previous day’s rally, with some scepticism over the China-US trade deal seeping in, while oil prices pushed higher after Washington flagged harsh sanctions on key producers Iran and Venezuela.

World markets fizzed Monday after US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He said they had agreed to pull back from the brink of a potentially damaging trade war.

However, while fears about the tariffs spat had roiled equities for months, investors were unable to kick on as they take a closer look at Sunday’s pact, which offered few details.

Analysts also pointed out the lack of agreement over intellectual property — a major stocking point for Donald Trump — as well as several other sectors.

Image may contain: one or more people, people sitting, table and indoor

Also tempering the optimism are worries about higher US interest rates and geopolitical issues.

“Markets are going through a bumpy ride,” Bank of Singapore Investment Strategist James Cheo told Bloomberg Television.

“This trade truce is still in the early days. It’s really a ceasefire, it’s not a peace treaty as yet. The implementation details are still unclear. There is still some caution among Asian investors.”

– ‘Strongest sanctions’ –

In early trade Shanghai was down 0.2 percent, while Tokyo finished the morning slightly down, Sydney slipped 0.9 percent and Wellington gave up 0.1 percent.

However, Singapore and Taipei each edged up 0.2 percent.

Hong Kong and Seoul were closed for public holidays.

Oil prices extended Monday’s gains of around one percent as the US unveiled its sanctions plans.

Secretary of State Mike Pompeo warned Tehran would be hit with the “strongest sanctions in history” while also warning European firms they were at risk if they continued to work with Iran, toughening up Washington’s policy line leaving the nuclear deal this month.

That came as Venezuela was targeted with fresh measures after the re-election of President Nicolas Maduro, which the US branded a “sham”.

Trump signed an executive order barring Americans from buying debt from Venezuela, cutting off an important source of revenue for the cash-starved regime. The measures did not target the country’s crucial oil exports, though analysts said they would likely be in the firing line at some point.

The moves put upward pressure on crude, which had been drifting after last week’s healthy gains, which have sent prices to highs not seen since late 2014.

“Fresh sanctions on Venezuela after the weekend election — including on bond-buying — and a belligerent speech from US Secretary of State Pompeo on Iran turned traders from some mild selling back to the buy side,” said Greg McKenna, chief market strategist at AxiTrader.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: FLAT at 23,000.72 (break)

Shanghai – Composite: DOWN 0.2 percent at 3,207.06

Hong Kong – Hang Seng: Closed for a public holiday

Euro/dollar: UP at $1.1790 from $1.1789

Pound/dollar: DOWN at $1.3427 from $1.3429

Dollar/yen: DOWN at 110.98 yen from 111.03 yen

Oil – West Texas Intermediate: UP 25 cents at $72.49

Oil – Brent North Sea: UP 15 cents at $79.37 per barrel

New York – Dow: UP 1.2 percent at 25,013.36 (close)

London – FTSE 100: UP 1.0 percent at 7,859.17 (close)

U.S. Stock Futures Jump With Dollar on Trade Truce

May 21, 2018

The dollar strengthened against most major peers and U.S. equity futures rallied as the world’s two largest economies appeared to step back from the brink of a trade war. Treasury yields climbed, and European shares advanced.

Image may contain: one or more people, people sitting, table and indoor

The greenback rose after Treasury Secretary Steven Mnuchin said the U.S. was “putting the trade war on hold,” amid progress in talks with China. The euro headed for a sixth day of declines after Italy’s two populist parties closed in on a pick for prime minister, while Italian bonds extended their decline. Media companies and retailers led advances in the Stoxx Europe 600 Index, though a number of countries are out for a holiday. U.S. oil futures handed back earlier gains after touching the highest level since 2014.

“The latest agreement suggests that in the end logic will prevail” between the U.S. and China, said Athanasios Vamvakidis, Bank of America Merrill Lynch global head of G10 FX strategy, in an interview on Bloomberg Television. “This is good news for the dollar.”

The easing protectionist tensions will offer some respite to traders as they grapple with the impact of rising Treasury yields and a stronger dollar. But the week ahead is loaded with risk events, including releases of the latest meeting minutes from both the Federal Reserve and European Central Bank, a slew of debt sales from the U.S., and preliminary purchasing manager indexes from the euro zone. Meanwhile, geopolitical stress lingers, with South Korea’s president visiting Washington to discuss North Korea and Brexit negotiations ongoing.

Elsewhere, emerging-market currencies continued to come under pressure, with Turkey’s lira falling more than 2 percent. Gold touched the lowest level this year.

Terminal users can read more in Bloomberg’s Markets Live blog.

These are some key events to watch this week:

  • Philadelphia Fed President Patrick Harker, Atlanta Fed President Raphael Bostic and Minneapolis Fed President Neel Kashkari all speak at various events early in the week
  • Brexit negotiations resume in Brussels Tuesday, and South Korea’s president visits Washington to discuss North Korea
  • Also Tuesday, Facebook founder/CEO Mark Zuckerberg is to be grilled by the European Parliament on his company’s use of personal data
  • The Federal Reserve releases minutes of policy makers’ May 1-2 meeting on Wednesday; U.S. new home sale also released as are euro-area and Japan PMIs
  • Thursday sees the Bank of England Markets Forum at Bloomberg London. Speakers include BOE Governor Mark Carney and New York Fed President William Dudley
  • At the St. Petersburg Forum Friday, Presidents Putin and Emmanuel Macron, IMF Managing Director Christine Lagarde, and Japan Prime Minister Shinzo Abe participate on a panel moderated by Bloomberg News editor-in-chief John Micklethwait
  • Also Friday, European Union finance ministers discuss the latest on Brexit talks, in Brussels.

These are the main moves in markets:

Stocks

  • The Stoxx Europe 600 Index rose 0.4 percent as of 1:31 p.m. London time, the highest in 16 weeks.
  • The MSCI All-Country World Index gained less than 0.05 percent.
  • Futures on the S&P 500 Index rose 0.6 percent to the highest in a week.
  • The U.K.’s FTSE 100 Index increased 0.8 percent to the highest on record.

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2 percent to the highest in more than five months.
  • The euro fell 0.1 percent to $1.1759 on its sixth consecutive decline.
  • The British pound decreased 0.3 percent to $1.3426, the weakest in almost 21 weeks.
  • South Africa’s rand dipped 0.7 percent to 12.8524 per dollar, the weakest in about five months.

Bonds

  • The yield on 10-year Treasuries climbed two basis points to 3.08 percent.
  • Britain’s 10-year yield declined one basis point to 1.5 percent, the lowest in a week.
  • Germany’s 10-year yield fell two basis points to 0.56 percent, the lowest in more than a week.
  • The spread of Italy’s 10-year bonds over Germany’s rose nine basis points to 1.7394 percentage points, the widest in more than seven months.

Commodities

  • West Texas Intermediate crude gained 0.2 percent to $71.41 a barrel.
  • Gold fell 0.6 percent to $1,284.96 an ounce, the weakest in almost 21 weeks.
  • LME copper rose 0.8 percent to $6,909.00 per metric ton, the highest in more than a week.

— With assistance by Ruth Carson, Andreea Papuc, and Yakob Peterseil

Bloomberg

 Updated on 

https://www.bloomberg.com/news/articles/2018-05-20/stock-futures-climb-on-u-s-china-trade-war-pause-markets-wrap

Asian markets rise as China and US agree to avert trade war

May 21, 2018

Asian markets rallied Monday and the dollar extended gains after the US and China said they had agreed to hold off imposing tariffs, averting a potentially damaging trade war.

21 May 2018 – 05H07

© AFP | Investors have welcomed news that China and the US have stepped back from the brink of a potentially demaging trade war

After high-level talks in Washington the two economic superpowers revealed a deal had been hammered out, ending months of tension that have sent financial markets into a frenzy.

Treasury Secretary Steven Mnuchin told Fox News on Sunday “right now we have agreed to put the tariffs on hold” while Xinhua reported China’s Vice Premier Liu He as saying “the two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other”.

While short on detail, the announcement provided much relief to investors, who had been fearing the imposition of levies on billions of dollars of exports between the two sides.

“The latest statement on the China-US trade suggests both parties are happy to avoid the dreaded tit-for-tat escalation while working towards a more market-friendly bilateral trade agreement,” said Stephen Innes, head of Asia-Pacific trade at OANDA.

“But the intentional vagueness delivered by both parties’ statements suggests a great divide, but there’s a hint of a consensus, none the less, to bridge that gap. So given the possible worst-case scenario was avoided the market should view the latest trade discussions as a favourable.”

– Dollar rallies –

Hong Kong led gains in Asia, climbing 1.3 percent and Shanghai was up 0.4 percent. Tokyo jumped 0.5 percent by the break as the weaker yen helped Japanese exporters.

Sydney rose 0.1 percent, Singapore added almost one percent and Seoul gained 0.2 percent, while Taipei rallied 1.3 percent.

The positive news also lifted the dollar, which had faced some selling pressure after Donald Trump earlier in the year imposed tariffs on steel and aluminium imports.

The greenback was sitting at its highest level against the euro since December, while it was at a four-month peak against the yen.

“After the US-China agreement on backing off from imposing trade tariffs on each other, one risk-off factor was removed, which pushed the dollar up against the yen,” Marito Ueda, senior dealer at FX Prime in Tokyo, told AFP.

Traders are awaiting the release on Wednesday of minutes from the Federal Reserve’s latest policy meeting, hoping for fresh clues about its plans for raising interest rates.

Continuing improvement in the US economy has fanned expectations the central bank will lift borrowing costs four times this year.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.5 percent at 23,042.54 (break)

Hong Kong – Hang Seng: UP 1.3 percent at 31,447.12

Shanghai – Composite: UP 0.4 percent at 3,205.99

Euro/dollar: DOWN at $1.1756 from $1.1780 at 2100 GMT on Friday

Pound/dollar: DOWN at $1.3458 from $1.3471

Dollar/yen: UP at 111.00 yen from 110.77 yen

Oil – West Texas Intermediate: UP 57 cents at $71.85

Oil – Brent North Sea: UP 62 cents at $79.13 per barrel

New York – Dow: FLAT at 24,715.09 (close)

London – FTSE 100: DOWN 0.12 percent at 7,778.79 (close)