By MarketWatch and Associated Press
Asian markets rallied Monday, after the U.S. and China over the weekend agreed to a timeout in their tariff war and agreed to resume trade negotiations.
After meeting with China’s President Xi Jinping on Saturday at the G-20 summit in Japan, President Donald Trump said that current tariffs would remain in place, but new ones would be placed on hold for the “time being.” Trump said his talks went “even better than expected” and that “we’re going to work with China where we left off.” Despite his optimism, the U.S. and China remain entrenched in their positions, and it is unclear how long it may take to reach a final agreement. The two sides haven’t met for formal negotiations since talks broke off in early May.
Japan’s Nikkei /zigman2/quotes/210597971/delayed JP:NIK +1.09% closed up 2.1%. The Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP +0.80% gained 2.2% and the smaller-cap Shenzhen Composite /zigman2/quotes/210598015/delayed CN:399106 +1.43% surged 3.5%. South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +0.33% finished unchanged, while benchmark indexes in Taiwan /zigman2/quotes/210597977/delayed TW:Y9999 +1.10% , Singapore /zigman2/quotes/210597985/delayed SG:STI +0.43% and Indonesia /zigman2/quotes/210597981/delayed ID:JAKIDX -0.69% advanced. Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.96% gained 0.4%. Hong Kong’s market was closed for a holiday.
“After spending the better part of two months in trade war purgatory and with G-20 done and dusted, risk markets have responded to Saturday’s events in a reveller tone,” Stephen Innes, managing partner at Vanguard Markets, said in a note Monday. “Indeed, investors heaved a massive, but exhausted, sigh of relief.”
“The biggest question on everyone’s mind is will any armistice stick or will history repeat, and trade war gridlock set in?” he added.
Among individual stocks, Japan Steel /zigman2/quotes/207991538/delayed JP:5631 +2.74% surged in Tokyo trading. Sony /zigman2/quotes/201361720/delayed JP:6758 +1.11% and robotics maker Fanuc /zigman2/quotes/202054799/delayed JP:6954 +1.15% also rose, while Rakuten /zigman2/quotes/201861450/delayed JP:4755 +1.68% slid. Samsung /zigman2/quotes/209800866/delayed KR:005930 +0.48% and LG Electronics /zigman2/quotes/209966407/delayed KR:066570 -0.41% declined in South Korea. Foxconn /zigman2/quotes/204111604/delayed TW:2354 -0.38% and Taiwan Semiconductor /zigman2/quotes/207385621/delayed TW:2330 +1.73% gained in Taiwan, and Oil Search advanced in Australia.
Wall Street ended last week on an upbeat note after the Federal Reserve raised expectations that it is prepared to cut interest rates if needed to keep the economy growing.
The S&P 500 index /zigman2/quotes/210599714/realtime SPX +3.09% rose 0.6% to 2,941.76. The index ended the month with a 6.9% gain. The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +2.18% gained 0.3% to 26,599.96. The Nasdaq composite /zigman2/quotes/210598365/realtime COMP +4.41% rose 0.5% to 8,006.24.
Despite the positive news on the trade front, the latest data were less upbeat.
A closely watched survey by Japan’s central bank, released Monday, showed confidence among major manufacturers in the economy worsened for the second straight quarter.
The Bank of Japan’s quarterly “tankan” survey of major companies showed confidence deteriorated in June compared with March, with the main index for major manufacturers fell to 7 in June from 12 in the previous quarterly survey in March.
Meanwhile, another indicator, the purchasing managers’ index (PMI) for China’s manufacturing sector, remained stable but still in contractionary territory at 49.4 in June, even with May’s reading, the National Bureau of Statistics reported.
Readings above 50 indicate expansion, while a reading below 50 reflects contraction.
Benchmark crude oil rose $1.59 to $60.08 a barrel in electronic trading on the New York Mercantile Exchange. It fell 96 cents to $58.47 a barrel on Friday. Brent crude , the international standard, rose $1.86 to $66.60 a barrel.
The dollar /zigman2/quotes/210561789/realtime/sampled USDJPY -1.2568% rose to 108.23 Japanese yen from 107.87 yen on Friday.