By Marketwatch and Associated Press
Asian markets surged Wednesday, following new hope on the trade front and strong gains on Wall Street.
President Donald Trump tweeted Tuesday that he’d had “very good telephone conversation” with China’s President Xi Jin ping, and said they would have “an extended meeting” during the G-20 meeting in Osaka, Japan, later this month. That was enough to rally Wall Street, which saw the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.71% climb 28.08 points, or 1% to 2,917.75. The Dow /zigman2/quotes/210598065/realtime DJIA +0.63% gained 353.01 points, or 1.4%, to 26,465.54, and the Nasdaq /zigman2/quotes/210598365/realtime COMP +0.55% jumped 108.86 points, or 1.4%, to 7,953.88. The benchmark S&P 500 is now less than 1% below its all-time high set on April 30.
Markets also got a boost after the head of the European Central Bank, Mario Draghi, said the bank was ready to cut interest rates and provide additional economic stimulus if necessary. The remarks put the spotlight on the U.S. Federal Reserve, which has its own decision on interest rates scheduled later in the day. Many think the U.S. central bank may be headed for its first interest rate cut in over a decade sometime later this year.
Japan’s Nikkei /zigman2/quotes/210597971/delayed JP:NIK -0.44% gained 1.8%, despite data that showed exports in May fell for a sixth straight month, and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.11% surged 2.4%. The Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP +0.47% rose 1.5% while the smaller-cap Shenzhen Composite /zigman2/quotes/210598015/delayed CN:399106 +1.33% jumped 2.2%. South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +0.50% rose 1.2% and benchmark indexes in Taiwan /zigman2/quotes/210597977/delayed TW:Y9999 -0.36% , Singapore /zigman2/quotes/210597985/delayed SG:STI -0.59% , Malaysia /zigman2/quotes/210598052/delayed MY:FBMKLCI -0.47% and Indonesia /zigman2/quotes/210597981/delayed ID:JAKIDX -0.52% all advanced. Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.72% rose 1%.
Among individual stocks, Japan Display /zigman2/quotes/204799605/delayed JP:6740 -1.96% skyrocketed after Apple Inc. /zigman2/quotes/202934861/composite AAPL +1.54% appeared willing to help the struggling maker of iPhone screens. SoftBank /zigman2/quotes/207303954/delayed JP:9984 -1.44% and Inpex /zigman2/quotes/206689846/delayed JP:1605 -3.04% also made strong gains in Tokyo trading. In Hojng Kong, Apple component makers Sunny Optical /zigman2/quotes/206687505/delayed HK:2382 +2.18% and AAC /zigman2/quotes/201441510/delayed HK:2018 -0.22% leapt higher, along with Sands China /zigman2/quotes/207609245/delayed HK:1928 +0.90% and food processing company WH Group /zigman2/quotes/204247792/delayed HK:288 +0.65% . Samsung /zigman2/quotes/209800866/delayed KR:005930 +1.50% and chip maker SK Hynix /zigman2/quotes/206420319/delayed KR:000660 -1.73% rose in South Korea, amd Taiwan Semiconductor /zigman2/quotes/207385621/delayed TW:2330 -1.42% advanced in Taiwan. In Australia, Beach Energy /zigman2/quotes/200513631/delayed AU:BPT -1.11% and Rio Tinto /zigman2/quotes/200083756/delayed AU:RIO -1.50% rose.
Trump stirred fresh optimism among investors when he said he will hold talks with Chinese President Xi Jinping at an international summit in Japan. U.S. businesses have implored Trump to stop escalating the trade war and refrain from expanding his tariffs to $300 billion on goods from China.
Analysts acknowledged an immediate resolution to the trade conflict isn’t expected, but the confirmation that Trump and Xi plan to talk at the G-20 in Osaka was cause for some optimism while warning that risks remain.
“While this certainly is a near-term boost for markets, the question as to what can be resolved by the two leader’s meeting that had not been done so despite months of discussions keeps this as a risk factor,” said Jingyi Pan, market strategist at IG in Singapore.
Two weeks ago, Fed Chair Jerome Powell set off a rally on Wall Street after he signaled that the central bank is willing to cut interest rates to help stabilize the economy if the trade war between Washington and Beijing starts to crimp growth. Any continued escalations could put the brakes on what is poised to be the longest economic expansion in U.S. history.
Investors collectively envision a Fed rate cut by July and possibly further cuts after that. Some even expect a rate cut this week. Many economists, though, think the Fed will wait until September at the earliest to announce its first drop in its benchmark short-term interest rate since 2008 and might not cut again in 2019. A few Fed watchers foresee no rate cut at all this year.
Benchmark crude oil rose 19 cents to $54.09 a barrel. It rose 3.8% to $53.90 a barrel Tuesday. Brent crude oil , the international standard, rose 7 cents to $62.23 a barrel.
The dollar /zigman2/quotes/210561789/realtime/sampled USDJPY +0.0332% rose to 108.34 yen from 108.27 yen on Tuesday.