Asian Shares Rise, Investors Await China-US Tariff Talks

Most Asian shares edged higher on Monday as investors expressed optimism over the planned trade discussions between China and the US.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.7 percent to $525.84, while Japan’s Nikkei 225 was down 0.3 percent to ¥22,199.00 and the TOPIX declined 0.3 percent to ¥1,692.15.

In South Korea, the KOSPI gained 0.04 percent to ₩2,247.88.

Hong Kong’s Hang Seng index climbed 1.4 percent to HK$27,598.02, while markets in mainland China rose, as the Shanghai Composite added 1.1 percent to CN¥2,698.47 and the Shenzhen Composite index advanced 0.6 percent to CN¥1,451.07.

While Japan’s equities fell, stocks increased in Hong Kong and Chinese shares were on track to cease five days of losses amid thin volumes in most of Asia.

Australia’s S&P/ASX 200 gained 0.09 percent to A$6,345.00.

Investors Hope for De-escalation of China-US Trade Tensions

Asian stock markets started the week on a optimistic note, following news of China and the US conducting lower-level trade talks later this month, encouraging traders to hold out hope that the escalating trade tariff war between the world’s two largest economies could still be averted.

Chief market analyst David Madden stated that trade discussions between Washington and Beijing are to continue this August and traders are cautiously optimistic, but just because the meeting has lined up does not mean anything will come of it.

Some traders see the recent weakness in the Chinese stock market and currency as a sign that China will be more cooperative when it comes to negotiations.

A nine-member delegation from Beijing, led by China’s Vice Commerce Minister Wang Shouwen, will hold a two-day meeting in Washington with US official led by Treasury undersecretary David Malpass on August 22 and August 23.

Dealers cited speculations the talks could pave the way for a summit between US President Donald Trump and Chinese President Xi Jinping in November.

Analysts said even though such a timeline for agreement is completely unlikely seeing how far apart the two countries are, the positive headline should help improve sentiment, pushing Asia’s emerging markets up for a short-term squeeze, with HK /China yuan sensitives likely leading the way higher.

China and the US have been locked in intensifying rounds of tit-for-tat tariffs, with $34 billion in goods targeted by each country. Washington’s additional $16 billion is due to take effect on August 23, along with retaliatory tariffs from Beijing on the same amount of US goods.

Trump has also announced in July that he was ready to impose levies on nearly all $500 billion of imported goods from China.

The US Trade Representative’s (USTR) office stated on Friday that it will conduct six days of hearings on the next $200 billion worth of Chinese products, instead of three days, as the agency expects a great number of US companies to testify.

359 people are slated to testify on behalf of US companies producing goods ranging from house building supplies to tech products, bicycles, and apparel. The hearings will be held on August 20 to 24 and on August 27.

The tariffs so far account for a relatively small amount of US-China trade, meaning the immediate economic impact of the trade war could be limited for both sides, giving some analysts another reason to expect the conflict to remain for some time.

Economists however, cautioned that a full-blown trade war could slow the US economy, especially if it goes on for more than a year.

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