By Swati Pandey and Wayne Cole
SYDNEY (Reuters) – Asian stocks crept higher on Thursday after a media report in the US and China so far agreed a ceasefire in front of a highly anticipated weekend meeting for the two nations' leaders in Tokyo.
The South China Morning Post (SCMP), referring to sources, said Washington and Beijing were to submit an agreement that would help to ward off the next round of tariffs on an additional $ 300 billion of Chinese imports.
On Wednesday, US President Donald Trump stated a trade deal with his Chinese counterpart Xi Jinping was possible this weekend, although he was willing to impose tariffs on almost all remaining Chinese imports whose calls fail.
"But the weapon cake seems to have been baked," SCMP said one of its sources.
Hoping that the world's two largest economies will finally come to an agreement was enough to cheer investors, and sent the MSCI's widest Asia-Pacific stock index outside Japan () up 0.8%.
China gave the gain with its blue chip index () up 0.9%. South Korea's KOSPI index () increased 0.6%, while Hong Kong's Hang Seng () and Japan's Nikkei () jumped around 1[ads1].2% each.
The collection in Asia also filtered to other regions. E-Minis for S & P500 () dressed 0.4% in late Asian trade while futures Eurostoxx 50 () increased 0.3% and those for London () added 0.1%.
"A ceasefire would be a short-term positive for markets," Bank of America-Merrill Lynch analysts wrote in a note. "But investors will probably start worrying, unless we move towards an agreement," they added.
"In the medium term, however, the commercial war will likely continue to destroy business understanding, weigh against the United States, China and regions trapped in the crossfire, such as the Asia-Pacific and Europe." for bonds and gold this year. It has also asked the US Federal Reserve to move the course, as it stopped price tightening and signaled a cut as soon as next month.
Many merchants were still cautious and expected the market to remain in a narrow area until after the weekend meeting of G20 leaders in Osaka, Japan, where Trump also holds bilateral talks with other nations.
"The focus continues to be on the G20 meeting with a story in the SCMP … lifting the whole market, although the details do not indicate anything has actually been agreed," says JPMorgan (NYSE 🙂 in a note.
"In general, the tariffs are more likely to be hiked than not, after the meeting, although the timing of this may be confused by a desire for positive optics."
LESS THAN 50
Trump weighed into US monetary policy Wednesday, and accuses Fed Mayor Jerome Powell of doing a "bad job" and "out to prove how tough he is" by not reducing interest rates.
Markets are convinced that the Fed will really ease its next meeting in July. but had to cut the bets at half a point, followed by cautious comments from various decision makers.
Futures are 100% priced for a cut of 25 basis points next month, and entail a 22% chance of 50 basis points.
less aggressive Fed and expectations A China-China trade trick helped ease US dollar sales, which increased 0.2% to 96.348 on a basket of currencies from a three-month breakthrough of 95,843.
The dollar jumped modestly toward the yen to 108.13 and away from a low of 106.77. The euro also eased back to $ 1,13505 from a top of $ 1,1412.
Dollars winnings took a bit of the brilliance of gold, which broke a session's winning stretch and eased to $ 1,403.94 per ounce.
Oil prices went into surplus, having achieved a larger than expected earnings in raw materials, as exports were record high and surprise falls in refined product stocks.
Brent crude () futures eased 23 cents to $ 66.26, while US crude () lost 25 cents to $ 59.13 per barrel.