Global stock markets were broadly higher on Tuesday morning in Asia after the Wall Street Journal reported that the United States and China were “quietly” negotiating a potential trade deal that could cool the brewing trade war and sparked fear among global investors. On Monday, White House trade advisor Peter Navarro expressed optimism that China would work with the U.S. to resolve the open trade-related issues satisfactorily. Chinese Premier Li Kequiang also said that he prefers to “stick to negotiations” to resolve the trade differences, rather than resorting to a trade war.
Japan’s Nikkei 225 soared 2.22 percent as of 1:27 p.m. HK/SIN, and the Shanghai Composite was up 1.04 percent. The Hang Seng Index was 0.87 percent higher, and South Korea’s Kospi was up 0.48 percent. The Asian gains came after a day of gains on Wall Street which saw a complete reversal of Friday’s losses.
Oil prices were also higher on Tuesday, receiving support from renewed optimism about U.S.-China trade relations, as well as a confirmation from Saudi Arabia and Russia that they expect to extend their current production cut agreement. Iraq also expressed support for OPEC’s production cuts on Monday. U.S. WTI futures were trading at $65.88 per barrel, up 33 cents per barrel, while Brent crude futures were up 21 cents per barrel to $70.33 per barrel.
Dollar Continues to Struggle
The dollar was trading mostly lower early on Tuesday afternoon in Asia, declining slightly against most of its trading partners, but gaining 0.25 percent against the yen to trade at 105.67 after falling below the 105 handle last week. The euro was the only major currency to hold onto its gains against the greenback, buoyed by comments from European Central Bank member Jens Weidmann who noted that an interest rate hike in mid-2019 could be possible. The dollar index was down 0.41 percent to 89.07 .DXY.