The major stock indexes in Asia are trading mixed on Wednesday, following the lead of Wall Street as investors continued to look for clarity over U.S.-China trade negotiations. There weren’t any new developments as the two economic powerhouses continued to work towards reaching a deal that could end the year-long trade dispute, but a high-ranking U.S. official did make some positive remarks.
At 03:47 GMT, China’s Shanghai Index is trading 3082.87, up 28.62 or +0.94%. Hong Kong’s Hang Seng Index is at 29055.77, up 94.17 or +0.33% and South Korea’s Kospi Index is trading 2174.06, down 5.17 or -0.24%.
Japan’s Nikkei 225 Index is trading 21600.28, down 126.00 or -0.58% and Australia’s S&P/ASX 200 is at 6242.70, up 43.40 or +0.70%.
Trade Talk Optimism Continues ….
As far as the trade talks are concerned, U.S. Secretary of State Mike Pompeo said Monday he thought Washington and Beijing were “on the cusp” of reaching a deal that would end the trade skirmish.
“We’re trying to get that rectified, get that fixed, make it fair and reciprocal and I think we’re on the cusp of doing that and I hope all those tariffs will go away, all those barriers,” he said.
Earlier on Monday, White House economic adviser Kevin Hassett and a spokesman for China’s parliament also made positive comments about the on-going negotiations.
Hassett said, “I think that it looks like Ambassador Lighthizer has made a lot of progress, and we might get there on China.”
“I think everybody’s hopeful, as the markets are, that this is going to get to the finish line sometime soon,” Hassett said.
In Beijing, Zhang Yesui, spokesman for China’s parliament, said that China and countries around the world welcomed “substantive progress” in the trade talks.
“We hope that both sides can continue to step up consultations, to reach a mutually-beneficial, win-win agreement,” Zhang said.
But There are Concerns…
Despite the prevailing optimism, Reuters, citing people familiar with the talks, is saying the two sides still had substantial work ahead to reach agreement on a way to ensure China’s follow-through on any pledges. Talks could still collapse if a deal cannot be reached on enforcement of these so-called ‘structural” issues.
Erin Ennis, senior vice president of the U.S.-China Business Council, said “It would be difficult to finalize the negotiation if the enforcement plan isn’t worked out.”
Still some Chinese officials and trade experts say they now increasingly anticipate any concessions to fall short of massive changes to China’s state-driven economic model sought by the Trump administration.
They also believe that President Trump’s backing away from additional tariffs after March1, signs of a slowing economy and the start of his re-election campaign, may be softening the President’s hard stance and that “Trump’s appetite to hold out for deep, immediate changes may be waning.”
Stock Market Rally Slows as Investors Seek Clarity
This week, U.S. stock markets are showing signs of mounting selling pressure. This threatens to end the 10-week rally. Some traders are saying that a trade deal may have been priced into the market, leading to profit-taking.
Others are saying, the lack of clarity over whether both parties are close to a deal, and the lack of details of the working agreement are making investors nervous. This is helping to encourage profit-taking and position-squaring.
Some also believe that investors are pricing in the possibility that Trump may back away from a deal like he did during the U.S.-North Korean nuclear negotiations last week in Viet Nam.
Late Tuesday, CNBC’s Jim Cramer said, “President Donald Trump is in a position to get more concessions or even walk away from trade negotiations with China President Xi Jinping as the Chinese economy weakens.”
“The U.S. could put more pressure on the Chinese to meet demands to stop stealing intellectual property intellectual property and allow American companies to operate in China without making joint ventures, among other priorities,” Cramer said. “Or Trump could walk away and find a better bargaining position, but it could come at a cost he might not want to take on,” he added.
This article was originally posted on FX Empire