Stock Markets Rallied After News on US-China Trade Tariffs Delay

Market Reviews

Japanese yen and US dollar weakened notably, after US and China agreed not to escalate trade war after meeting between Trump and Xi at the G20 summit. Australian dollar, Canadian dollar and New Zealand dollar are trading as the strongest ones. Australian dollar remains steady despite weak manufacturing, building and profits data.

Equity markets responded positively to the development in the US-China trade war. Nikkei closed up 1.0% at 22574.76. Hong Kong HSI added 2.46%, China Shanghai SSE gained 2.57%. Singapore Strait Times increased 2.26%.

US President Donald Trump and Chinese President Xi Jinping agreed to keep their trade war from escalating with a promise to halt the imposition of new tariffs for 90 days as the world’s two largest economies negotiate a lasting agreement. The two sides would step up negotiations toward full elimination of all additional tariffs.

Today’s data showed, that China Caixin PMI rose 0.1 to 50.2 in November, slightly above expectation of 50.1. Japan PMI manufacturing was finalized at 52.2 in November, revised up from 51.8. Japan capital spending increased 4.5% in Q3, much lower than expectation of 8.6%.

Economic data from Australia showed, that Australian Industry Group Performance of Manufacturing Index dropped sharply by -7 to 51.3 in November, the lowest level since October 2017. Australia building approvals dropped -1.5% mom in October, below expectation of -1.4% mom. Company operating profits rose 1.9% qoq, below expectation of 2.9% qoq.

Fed Chair Jerome Powell’s testimony will be a major focus of the week. The Bank of Canada will announce its rate decision on Wednesday. The BoC is widely expected to keep interest rate unchanged at 1.75%.