Asian markets reversed early declines yesterday, and turned higher, helped by Wall Street stocks that rose after a bounce-back session on Wall Street.
The Nasdaq climbed 1.1% following modest gains on Wall Street. Japanese stocks, despite a 1.1% intraday decline, closed higher. Chinese shares rose on the prospect of easing concerns about trade following reports that Beijing is prepared to step in to support sectors affected by tariffs from the United States, including vehicle manufacturing.
“A trade agreement to end the trade war is one of the biggest economic projects facing politicians since the 2016 US election. Hopes are high that the US-China trade talks can be a turning point after two years of uncertainty,” wrote Jingyi Pan, senior market strategist at IG.
The Nikkei and the Hang Seng closed up 0.2% and 0.4%, respectively. The Nikkei has closed on positive territory in six of the last eight sessions.
“The yen is pulling the index down, but when you combine falls on Wall Street, it is something the Japanese market is tracking. We had a strong rally on the Nikkei the previous day, and the yen is weakening after that. It’s probably the final entry point for people who missed out on gains from March,” Dan Niles, chief investment officer of AlphaOne Capital Partners, told CNBC’s “Squawk Box.”
The S&P/ASX 200, China’s benchmark index, opened higher this morning and edged higher. It has gained 3.8% since the end of May, and 2.9% since the start of June. It may challenge last month’s five-year high. It has gained 5.5% this month, and 18.7% this year.
“The market seems to be looking at the trade discussions between the U.S. and China as having got a bit more bearish,” IEO Group chief investment officer Hao Hong told CNBC. “The chances of an immediate deal are slim, so the market may take a long time to get back to this current bullish pattern.”
The Yuan also rose slightly, rising 0.1% to 6.8952, according to Bloomberg. At the end of May, the Yuan was at its lowest level against the dollar since 2011. During the trading session, China vowed to use macroeconomic tools “to further control financial risk,” and set new reserve requirements for financial institutions. The authorities stated that their actions in the market are justified by the shortage of liquidity and volatility.
Chinese stocks, along with the Nikkei 225, returned strong returns over the past two years. The Nikkei 225 has returned 177% in the past year, and 195% over the past two years. China’s benchmark stocks, the Shanghai Composite Index, returned 132% and 131% over the past year, and two years.