Monday 1 June 2020 7:17 am

Asian stocks hit three-month high as US-China deal stays intact

Asian stocks have risen to a three-month high despite US-China tensions, after President Donald Trump stopped short of economic retaliation against Beijing over Hong Kong on Friday.

Markets in Asia were also unfazed by the fiery protests raging in the US after the death of black man George Floyd at the hands of police. Some US investors fear the protests could lead to a second peak of coronavirus infections.

Read more: UK urges China to reconsider Hong Kong security law

China’s CSI 300 blue-chip index rose 2.8 per cent, hitting its highest level in three months. Hong Kong’s Hang Seng jumped 3.4 per cent. Meanwhile, Japan’s Nikkei 225 rose 0.9 per cent.

Risk sentiment returned to Asian markets after a nervously awaited speech by Trump on Friday was less damaging to US-China relations that investors had feared.

Trump’s speech was in response to China’s move to impose a security law on semi-autonomous city Hong Kong. Critics say it would end the “one country, two systems” method of government in place since the 1990s that gives the city special freedoms.

“As expected, the President withdrew Hong Kong’s special status over the new China imposed security law,” said Jeffrey Halley, senior Asia Pacific market analyst at currency firm Oanda. 

“What he did not do, however, was withdraw from the US-China phase one trade agreement signed in January.” Halley added: “The collective sigh of relief in Asia is palpable this morning.”

An official business survey from China showed that manufacturing output grew for the third month in a row, but nonetheless slowed down.

Read more: Raab: UK will increase visa rights if China goes ahead with Hong Kong law

Futures prices indicated that European markets are set to open higher. The FTSE 100 and other European indices fell sharply on Friday ahead of Trump’s speech.

US stocks are set to open slightly lower, according to future prices. Violent protests are raging across the US, with thousands taking to the streets to express their anger at police brutality.