Asia report: Markets higher as Trump and Xi agree to trade war ceasefire

Most markets in Asia finished in positive territory on Monday, after US president Donald Trump and his Chinese counterpart Xi Jinping agreed to a temporary downing of weapons on the ongoing trade war between the two nations.

In Japan, the Nikkei 225 was up 1% at 22,574.76, as the yen strengthened 0.04% against the dollar to last trade at JPY 113.53.

The broader Topix Index was 1.3% higher at 1,689.05 in Tokyo.

On the mainland, the Shanghai Composite was 2.57% stronger at 2,654.80, and the smaller, technology-heavy Shenzhen Composite tacked on 1.28% to 1,381.55.

Aside from the positive news out of the G20 meeting, fresh economic data also showed some small growth in manufacturing activity in China in November.

The unofficial Caixin/Markit Manufacturing Purchasing Managers’ Index rose to 50.2, from a reading of 50.1 in October.

It not only indicated growth, but was a swing in the opposite direction to what analysts had forecast, with a Reuters poll putting the expected reading at 50.0.

South Korea’s Kospi was up 1.67% at 2,131.93, while the Hang Seng Index in Hong Kong rose 2.55% to 27,182.04.

Sentiment in the region was given a boost by the outcome of the meeting between Trump and Xi on the sidelines of the G20 summit in Argentina, with the two leaders agreeing to hold fire for the time being.

Analysts at Rakuten Securities Australia called it “probably the best case scenario that markets were hoping for”, though they did point out that analysts were already sifting through the detail of the agreement and expressing early doubt as to whether it will stick.

“A simple look at the two press statements from either side shows some quite glaring differences of opinion and this could lead to a relatively short lived lift in investor confidence,” they noted.

Oil prices were higher as the region went to bed, with Brent crude last up 3.96% at $61.91 per barrel and West Texas Intermediate adding 4.52% to $53.34.

In Australia, the S&P/ASX 200 managed gains of 1.84% to settle at 5,771.20, with the major miners among the big winners of the day.

BHP was up 3.68%, Fortescue Metals added 4.25% and Rio Tinto rose 2.33%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.6% higher at 8,876.09, led higher by specialist dairy exporter A2 Milk, which rose 5.4% after confirming it would meet new border e-commerce regulations in China.

Investors were concerned that the regulations would negatively affect sales of A2’s flagship ‘Platinum’ infant food product.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.89% at AUD 1.3555 and the Kiwi advancing 0.67% to NZD 1.4436.