Asian stocks rise despite lingering US-China trade issues

Asian equity bourses are reporting gains this Tuesday morning with investors cheering President Trump’s decision to abandon plans to impose tariffs on Mexican goods.

As of writing, Japan’s Nikkei is up 0.23% at 21,185 and Australia’s S&P/ASX 200 is trading 1.2% higher at 6,524. Stocks in South Korea, Hong Kong are also flashing green with the Shanghai Composite up 0.92% at 2,878.

The US stocks also gained ground on Monday with the Dow Jones Industrial Average (DJIA) rising 0.30% to 26,062. Further, the futures on the S&P 500 are currently reporting a 0.20% gain.

On Friday, President Trump announced suspension of plan to impose tariffs on Mexican goods. That coupled with dovish Fed expectations seem to have put a bid under the global stocks.

However, Goldman Sachs believes the market has run ahead of itself in pricing three Fed rate cuts for 2019 and the central bank will likely stand pat for the rest of the year.

Further, the Sino-US trade tensions continue to linger with the US President Trump threatening more tariffs on Chinese goods if he fails to make progress in trade talks with Chinese President Xi Jinping at the G20 summit.

As a result, the equity markets may have a hard time extending the recent risk-on rally.

While the equities are bid in Asia, the US treasuries are losing ground, with the 10-year yield currently trading at 2.155%, the highest level since May 31. 

Meanwhile, the dollar index, which track the value of the greenback against majors, is reporting moderate gains at 96.80, but is still stuck between the 100- and 200-day moving averages, currently located at 96.98 and 96.48, respectively.