Asia stocks edge higher amid trade optimism

Employees work at the Tokyo Stock Exchange. (Bloomberg pic)

SYDNEY: Asian stocks are set to take their cue from a strong American equity session, boosted by optimism on US-China trade talks.

Treasuries slipped and the dollar edged lower after eight days of gains.

Futures pointed to a modest rise in shares in Japan, Hong Kong and Australia after the S&P 500 Index broke through its 200-day moving average with a gain of over 1%.

Risk appetite was also helped by signs of a tentative deal among American lawmakers to avert a government shutdown.

Oil rebounded from a two-week low after Saudi Arabia pledged to deepen production cuts.

President Donald Trump said he’s open to extending a March 1 deadline to raise tariffs on Chinese products if the two sides are near an agreement, sending a conciliatory signal amid talks to resolve the trade war between the world’s two biggest economies.

US lawmakers said they have reached an “agreement in principle” on border security funding that would forestall a second shutdown.

While Trump expressed reservations about the border agreement, he said he’d consider the proposal.

The prospect of a deal to keep the US government open together with hints that Trump may reach an accord with China appear to be rekindling the rally in riskier assets that has stalled after a stellar start to the year.

A dovish shift by many of the world’s central banks has also helped, but at the same time has underscored the dilemma facing investors – join the chase for late-cycle gains, or gird for a looming slowdown in global growth.

“None of the worries that people had in the fourth quarter have really gone away,” said John Carey, managing director and portfolio manager at Amundi Pioneer Asset Management.

“But people are maybe a little less concerned now and a little bit more positive about the ability of the economy to continue in a growth trajectory over the next couple of years, and that should be good for earnings.”

Elsewhere, emerging-market shares climbed and their currencies edged higher.

The pound gained as UK Prime Minister Theresa May updated lawmakers on the progress of Brexit talks with the EU.

The offshore yuan strengthened for the first time in five days.