(Bloomberg) — Asian equities edged higher in relatively muted trade after China and the US agreed to extend their tariff truce. The South Korean won led gains in Asian currencies.
The MSCI regional stock gauge rose 0.5% with technology shares such as Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. advancing. The won rose as much as 0.8% after local media reported the US demanded gains in the currency during trade talks. Oil held its biggest gain in six weeks after President Donald Trump reiterated that further levies on Russia remained on the table.
Trump is set to make the final call on maintaining the tariff truce with China before it expires in two weeks, an extension that would mark a continued stabilization in ties between the world’s two biggest economies. Shares in Shanghai rose 0.6% while those in Hong Kong declined 0.2%.
Much like the muted response to the US-EU tariff deal, the latest signs of progress with Beijing produced only a modest gain in stocks and did little to buoy investor sentiment. Traders are also focused on several key catalysts on the horizon, such as Wednesday’s Federal Reserve decision — where policy makers are expected to keep rates on hold — and Friday’s US jobs report. Adding to the busy calendar, four tech giants are set to report earnings over a two-day stretch.
“The market is getting better at pricing this behavior — that is, extension, as long as you say it’s positive development,” said Billy Leung, an investment strategist at Global X ETFs. “Previously, this lack of development could have caused a much larger negative reaction.”
The Stockholm negotiations marked the third round of US-China trade talks in less than three months. They wrapped up ahead of an Aug. 12 deadline to resolve differences during a 90-day suspension of tariffs that had threatened to cut off bilateral trade between the two nations.
The discussions showed a “willingness to reach an agreement,” said Jun Bei Liu, founder of Ten Cap Investment. Markets have been ‘incredibly strong, we are just seeing some consolidation,” she said.
Meanwhile, Trump said that India may be hit with a tariff rate of 20% to 25% but cautioned the final levy had still not been finalized as the two countries negotiate on a trade deal ahead of an Aug. 1 deadline.
The won jumped after the Korea Economic Daily said the issue of foreign exchange will be on the table again when Finance Minister Koo Yun-cheol holds final trade talks with US Treasury Secretary Scott Bessent on Thursday. The newspaper didn’t identify where the information came from.
US officials and policy advisers, including the White House’s chief economist Stephen Miran, have rejected the notion that a secret currency accord to weaken the dollar is in the works as part of trade negotiations around the world.
Elsewhere, the US issued a tsunami warning for Hawaii following a powerful earthquake off the east coast of Russia, alongside a similar alert from Japan. The magnitude 8.7 quake struck southeast of the Kamchatka Peninsula, according to the US Geological Survey, on Wednesday morning local time.
The yen gained 0.3% against the dollar after a tsunami warning for areas including the Tokyo Bay.
Treasuries were little changed in Asia after jumping the most in a month on Tuesday.
In Australia, bonds extended gains and the currency dipped after core inflation unexpectedly slowed.
In a rare occurrence, US policymakers will convene in the same week that the government issues reports on gross domestic product, employment and the Fed’s preferred price metrics. Fed Chair Jerome Powell could face dissent from one or more colleagues arguing it’s time for the central bank to provide more support to a slowing labor market.
“We believe the Fed wants to maintain flexibility on when to deploy further rate cuts” said Luis Alvarado at Wells Fargo Investment Institute. “The Fed will have the opportunity to cut rates later in the year if the economy slows and as long as inflation allows.”
Corporate News:
Iveco Group NV confirmed it’s planning to break up the company, saying it is in advanced discussions to sell its defense unit and the commercial truck manufacturing operations to separate buyers. The statement came after Bloomberg reported that the company was poised to announce a sale of the defense unit to Leonardo SpA and the commercial trucking business to India’s Tata Motors Ltd. as early as Wednesday. Shares of Samsung Electronics Co. rose after the company’s surprise $16.5 billion chipmaking deal with Tesla Inc. has breathed new life into a foundry business all but written off by many investors. Reliance Industries Ltd. is proposing to sell just 5% of its Jio telecommunications unit in a potential listing that may raise more than $6 billion, people familiar with the matter said. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.1% as of 12:19 p.m. Tokyo time Japan’s Topix rose 0.3% Australia’s S&P/ASX 200 rose 0.7% Hong Kong’s Hang Seng fell 0.4% The Shanghai Composite rose 0.5% Euro Stoxx 50 futures rose 0.2% Currencies
The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.2% to $1.1568 The Japanese yen rose 0.4% to 147.87 per dollar The offshore yuan was little changed at 7.1776 per dollar Cryptocurrencies
Bitcoin rose 0.4% to $117,966.64 Ether rose 1.3% to $3,814.92 Bonds
The yield on 10-year Treasuries was little changed at 4.32% Japan’s 10-year yield was unchanged at 1.555% Australia’s 10-year yield declined six basis points to 4.27% Commodities
West Texas Intermediate crude fell 0.2% to $69.06 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jacob Gu, Winnie Hsu and Abhishek Vishnoi.
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