Asian shares hit their highest in nearly eight months on Monday after the United States and China agreed on a preliminary trade deal, with Australian shares leading the way on expectations of more easing of monetary policy there, reports Reuters.
European shares were set to build on the previous week’s gains. In early European trades on Monday, pan-region Euro Stoxx 50 futures were up 0.62 per cent, German DAX futures were 0.5 per cent higher and FTSE futures rose 0.6 per cent.
US stock futures also pointed to stronger gains to start the week, with the S&P 500 e-minis up 0.27 per cent.
US Trade Representative Robert Lighthizer said on Sunday a deal was “totally done”, notwithstanding some needed revisions, and would nearly double US exports to China over the next two years.
Positive sentiment helped push the MSCI’s broadest index of Asia-Pacific shares outside Japan to its highest level since April 18. It was last up 0.25 per cent.
Australia’s S&P/ASX 200 led the way as it jumped 1.63 per cent, while shares in Taiwan added 0.22 per cent.
Ryan Felsman, senior economist at CommSec in Sydney, said the trade deal and the receding risk of a disorderly Brexit after the UK general election produced a strong Conservative majority provided support for sentiment in Australia.
A lower-than-expected Australian budget surplus due to a sluggish economy has also “built expectations by markets for further easing from the Reserve Bank (of Australia),” he said.
Chinese investors initially had a more tepid reaction to the trade news, with the blue-chip CSI300 index struggling to rise further after trade hopes fanned a near 2.0 per cent rise on Friday.
But after a lackluster morning session, the CSI300 index turned higher in the afternoon and was last up 0.3 per cent, helped by data showing the country’s industrial output growth and retail sales jumped more than expected in November.
Japan’s Nikkei 225 succumbed to some profit-taking, falling 0.29 per cent after surging 2.55 per cent to a 14-month closing high on Friday.
The “phase one” agreement suspended a threatened round of US tariffs on a $160 billion list of Chinese imports that was scheduled to take effect on Sunday. The United States also agreed to halve the tariff rate, to 7.5%, on $120 billion worth of Chinese goods.