Yahoo Finance Asian Stocks Higher on Wall Street’s Lead Ahead of Fed Decisions
Asia-Pacific shares are trading higher on Wednesday on optimistic developments overnight regarding U.S.-China trade relations. This fueled a surge on Wall Street that drove the major stock indexes to within striking distance of their all-time highs. The bullish tone created by the earlier rally has carried over into the Asian trade.
Dovish comments from European Central Bank President Mario Draghi and expectations that the Federal Reserve will open the door to at least three rate hikes later this year are also underpinning the markets today.
At 03:52 GMT, Japan’s Nikkei 225 Index is trading 21315.16, up 342.45 or 1.63%. Hong Kong’s Hang Seng Index is at 28154.85, up 656.08 or +2.39% and South Korea’s KOSPI is trading 2118.50, up 19.79 or +0.98%.
Australia’s S&P/ASX 200 Index is trading 6642.30, up 72.30 or 1.10% and China’s Shanghai Index is at 2933.64, up 43.49 or +1.50%.
Trump Bump Spikes Stocks Higher
A tweet by U.S. President Trump is one of the reasons for the early strength. On Tuesday, Trump tweeted that he “had a very good telephone conversation” with Chinese President Xi Jinping. He added: “We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting.” The summit begins on June 28.
Not Everyone is Optimistic Over Upcoming Summit Meeting
“We do not believe that the meeting will deliver a trade deal, even if the meeting does take place. From the Chinese side, the discussion with US President Trump is expected only to exchange views on fundamental issues concerning the development of China-US relations,” Iris Pang, Greater China economist at ING, wrote in a note.
“The news on the talks in Osaka is a short term positive for asset markets, but we believe any talks will change little unless either side makes some meaningful concessions, which we do not view as likely at this time,” Pang added.
A former top trade advisor to President Donald Trump doesn’t think a trade deal will be reached at the G-20 summit.
“There won’t be a deal at the G-20,” Clete Willems said in an interview with CNBC. He further added that a meeting between the two leaders, while not the final step in negotiations, is “a necessary ingredient at this point.” He also cautioned that a G-20 meeting between Trump and Xi would only lay the groundwork for a possible deal.
Bulls Want to Hear This From Fed
Since Fed Chair Jerome Powell greenlit the current rally on June 4, stock investors have been pricing in at least three rate cuts in 2019. While there is only a 20% chance of a rate cut in June, traders want to hear the Fed is leaning to its first cut in 10 years in July. If this isn’t stated clearly then the markets could weaken.
This article was originally posted on FX Empire
