Asian stocks rallied slightly overnight, as investors hoped for progress in the trade war between the US and China.
It comes in part as a reaction to comments by US national security adviser Robert O’Brian over the weekend, that an initial – or so called phase one – trade agreement with China is still possible by the end of the year.
Tokyo’s Nikkei was up 0.8 per cent, the Hang Seng index was up 1.5 per cent and the Shanghai Composite Index rose 0.7 per cent.
However, O’Brien also warned Washington would not turn a blind eye to the ongoing febrile situation in Hong Kong, adding to concerns that a Chinese crackdown on anti-government protests could jeopardise the negotiations.
US President Donald Trump has said the protests and Beijing’s response has had “a tremendous negative impact” on the trade talks.
Over the weekend, pro-democracy candidates in Hong Kong romped to a landslide and symbolic majority in district council elections in the embattled city.
Neil Wilson, chief market analyst at Markets.com, said: “On trade, it’s the usual Washington two-step – one step back, another step forwards.
“The picture on trade remains rather muddy, not least because of the incendiary situation in Hong Kong that is becoming increasingly ‘economized’, but the latest developments will likely lend support for risk.”
“The fact that talks are still happening remains a positive,” said Robert Rennie, head of financial market strategy at Westpac.
“Markets are showing some signs of tiring of the steady drip feed of upbeat comments from US officials and no signs of a final agreement looking likely.”