Most Asian markets enjoyed another day of gains Wednesday, with support coming from more healthy earnings results and renewed hopes for a resolution of the China-US trade war.
The pound was barely moved after Tuesday’s brief rally in reaction to Boris Johnson’s election to replace Theresa May as British prime minister, with investors keen to see whether the leading Brexiter pushes ahead with a no-deal divorce from the EU.
The meeting would be the first head-to-head since negotiations were cut short in May by Trump’s surprise decision to hit China with more tariffs for what he called Beijing’s backsliding
While Federal Reserve officials are blocked from speaking on policy ahead of a crucial meeting next week, their decision on how far to cut interest rates is the big question on trading floors.
However, investors are still keeping an eye on the corporate reporting season, which has been broadly positive.
The latest big-name firms to post positive results were Coca-Cola, toymaker Hasbro and Harley-Davidson, helping all three main indexes on Wall Street end with sharp gains.
Adding to the upbeat mood were reports that Donald Trump’s Trade Representative Robert Lighthizer will lead a delegation to China next week to resume trade talks.
The meeting would be the first head-to-head since negotiations were cut short in May by Trump’s surprise decision to hit China with more tariffs for what he called Beijing’s backsliding.
Since then he has met China’s Xi Jinping on the sidelines of the G20 in Japan, where they agreed to get both sides back around the table.
But Vanguard Markets’ Stephen Innes said: “While the trade conversation remains high on the list of supportive factors for equity market this week, investors’ risk barometers are completely dialed in on the amplitude of the US Federal Reserve’s next easing cycle as the looser the policy, the higher equity markets will soar.”
In early trade, Hong Kong was up one percent and Shanghai more than one percent, while Tokyo went into the break 0.5 percent higher.
Sydney gained 0.8 percent and Singapore put on 0.3 percent but Taipei and Seoul each dipped 0.1 percent while Wellington and Manila also fell.
On currency markets, the pound remained stuck around two-year lows against the dollar after Johnson’s expected leadership win, which means he will be appointed prime minister later Wednesday.