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Asian stocks rise to six-week highs on easing US-China trade tensions

Written By Omkar Godbole | 2019-09-11 22:53:50 GMT
  • Asian stocks hit six-week highs on Trump's decision to delay tariff hike. 
  • ECB is expected to cut rates and restart the quantitive easing program. 

Asian stocks are better bid with MSCI’s broadest index of Asia-Pacific shares trading at six-week highs, courtesy of the easing US-China trade tensions. 

The index is currently trading 0.20% higher on the day at 512, the level last seen on Aug. 1. 

Meanwhile, Japan's Nikkei index is currently reporting 0.85% gains and shares in South Korea and Australia are adding at 0.80% and 0.35%, respectively. 

The Shanghai Composite index is trading in a sideways manner and the shares in Hong Kong are down 0.54%. 

The S&P 500 futures are also up more than 0.30%. The stock futures picked up a bid after the US President Donald Trump delayed an additional increase in tariffs on $250 billion worth of Chinese goods by two weeks to Oct. 15.

Trump's goodwill gesture has come a day after China announced exemption for some US products like industrial grease from a recent round of tariffs. 

The gradual de-escalation of trade tensions is boding well for the Asian equities and riskier assets in general. For instance, China's offshore Yuan hit three-week highs against the US Dollar in early Asia and the US treasury yield rose to a one-month high of 1.76%. 

Focus on the ECB

The European Central Bank (ECB) is expected to dole out fresh stimulus on Thursday. The bank is expected to cut rates at least by 10 basis points to -0.50% and announce the restart of bond purchases from October. 

It is worth noting that the market is priced for a 10 basis point rate cut. For instance, the two-year German yield is currently down more than 40 basis points from the current deposit rate of -0.40%. 

The equities, therefore, may come under pressure, if the ECB delays the quantitative easing program. 

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By Omkar Godbole

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