Asian stocks cautiously bid on US-Sino trade talks

Asian stocks are reporting moderate gains this Monday morning in Asia, possibly on renewed optimism that Sino-US trade talks will progress at G-20.

As of writing, Japan’s Nikkei is up 0.10% at 21,265 and the Shanghai Composite index is reporting 0.15% gains at 3,006. Stocks in New Zealand, South Korea are also flashing green, while Australia’s S&P/ASX 200 is down 0.18% at 6,637.

Meanwhile, the futures on the S&P 500 are up 7 points or 0.27% at 2,958.

A telephone call between the US President Trump and his Chinese counterpart Xi last week and the confirmation that the two parties will meet in Japan on the sidelines of a Group 20 summit seems too have rekindled hopes of a trade deal.

The odds of a trade deal, however, are quite low as noted by CNBC’s Jim Cramer last week.

Moreover, tensions have extended beyond tariffs in the last few weeks with Washington putting Huawei – China’s biggest telecoms gear maker – on a blacklist.

Further, the Global Times newspaper reported on Sunday that FedEx Corp could be added to Beijing’s unreliable entities list.

As a result, the upside in Asian equities looks limited. At the same time, he dovish Federal Reserve expectations could cushion the impact of further escalation trade tensions, if any.

The US central bank kept key rates unchanged last week, but removed the word “patience” from its forward guidance on interest rates, setting the stage for a rate cut later this year.