U.S. President Donald Trump commented on Monday that he expects a part of the U.S.-China trade deal to come ahead of schedule, though in typical fashion, he did not provide more details about what parts will be completed early, or when ‘early’ would be. The news encouraged optimism in the markets but was not enough to keep Asian benchmarks entirely in the green on Tuesday afternoon.
Japan’s Nikkei 225 was up 0.41 percent as of 1:46 p.m. HK/SIN, to levels not seen since October 2018. Austalia’s ASX 200 was also up a modest 0.07 percent. China’s two benchmark indexes were trading lower despite the announcement, with the Shanghai Composite down 0.062 percent and the Shenzhen Composite 0.50 percent lower. Hong Kong’s Hang Seng Index sunk 0.52 percent. Despite Trump’s expectations for an early trade deal, traders remain cautiously optimistic. A trade deal, even on time, could help boost the global economy, while the deal could still crumble at any moment until it’s signed, which would send the global economy further into a slump.
At the moment, agricultural products are a focus of the trade talks; Beijing is asking the U.S. to remove some of the tariffs it has placed on Chinese products, and it has committed to purchasing additional soybeans from the U.S. in exchange for the cancellation of these tariffs. One complication, however, is that the U.S. wants China to commit to purchasing its soybeans for a specific price at on a specific schedule, while China wishes to keep these terms flexible.
The S&P 500 closed at record highs on Monday, ending up 0.56 percent for the day. The Nasdaq closed up 1.01 percent while the Dow Jones Industrial Average ended 0.49 percent higher.
On the currency markets, the yen was moderately lower as traders cautiously stepped aware from the safe-haven asset on hopes that a trade deal will materialize. The U.S. dollar edged up 0.04 percent against the yen to 108.97. Both the euro and the British pound eased against the greenback as well. The pound was down 0.07 percent to $1.2853, while the euro was down 0.07 percent to $1.1089.