Asian Investors Optimistic as Trade Talks Move to Washington

The major Asia/Pacific stock markets are trading higher on Monday. The positive tone is being generated by optimism that the U.S. and China are close to a trade deal. This comes ahead of trade talks between the two economic powerhouses which are set to resume in Washington this week after high-level discussions in Beijing last week. Volume is a little on the light side because of a U.S. bank holiday.

At 04:13 GMT, In Japan, the Nikkei 225 Index is trading 21289.85, up 389.22 or +1.86%. Hong Kong‘s Hang Seng Index is trading 28333.00, up 432.16 or +1.55%. South Korea’s KOSPI Index is at 2210.67, up 14.58 or + 0.66% and Chinas Shanghai Index is 2730.27, up 47.89 or +1.79%. Stocks are even trending higher in Australia with the S&P/ASX 200 Index trading 6091.00, up 24.90 or +0.41%.

Trade Talks Set to Resume

U.S. and Chinese negotiators reported progress following the five days of high-level trade talks in Beijing last week. Traders are hoping this creates some positive momentum heading into the continuation of trade talks this week in Washington.

Progress or No Progress？

There are currently two schools of thought regarding the progress of the trade talks. However, the price action in the equity markets seems to suggest that investors are buying the positive chatter.

President Trump said at a White House news conference that Washington was closer than ever before to “having a real trade deal” with Beijing and that he would be “honored” to remove tariffs if an agreement can be reached. He added, however, that the talks were “very complicated.”

Trump expressed optimism when he reiterated the possibility of extending the March 1 deadline. Additional tariffs on Chinese goods might go into effect after this date if Washington and Beijing can‘t reach a deal, however, investors don’t seem to be too concerned with some analysts calling it “political theater.”

Kim Iskyan, analyst at Stansberry Pacific Research, told CNBCs “Squawk Box” on Monday that the two sides would likely end up “kicking…the whole can down the road again,” adding that the deadline in early March “was kind of bogus in the first place.”

In other words, investors dont seem to be too concerned about the deadline or additional tariffs, they just seem to be happy that both parties are still negotiating. Additionally, investors are likely to remain optimistic if even if both parties decide to take a break after March 1 to regroup and come back for additional talks shortly thereafter. Furthermore, a meeting between U.S. President Trump and Chinese President Xi Jinping, which may take place in March, may add further optimism to the markets.