Asian share markets have pushed higher with signs of progress in the Sino-US trade stand-off whetting risk appetites, while pressuring safe-haven bonds and the yen.
Liquidity was lacking, however, with Japan off and a partial market holiday in the United States for Columbus Day. MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.5 per cent.
Australia’s main index gained 0.9 per cent and South Korea firmed 1.3 per cent.
While Tokyo was on holiday, Nikkei futures were trading at 22,105 compared with a Friday close of 21,798 in the Nikkei index. E-Mini futures for the S&P 500 also added another 0.36 per cent after jumping on Friday.
Sentiment had been boosted when President Donald Trump outlined the first phase of a deal to end a trade war with China and suspended a threatened tariff hike.
Secretary @stevenmnuchin1 and @UStraderep Lighthizer with Chinese Vice Premier Liu He and the Chinese delegation at a working dinner last night during the 13th round of trade negotiations. (Official White House photo by Keegan Barber) pic.twitter.com/uH8vt7yGA7
— Treasury Department (@USTreasury) October 11, 2019
Even so, officials on both sides said much more work needed to be done.
The emerging deal, covering agriculture, currency and some aspects of intellectual property protections, would represent the biggest step by the two countries in 15 months.
“The substance is more in the vein of an extension of the truce – though that was the best the market could have hoped for,” said National Australia Bank director Tapas Strickland.
“Still, it is unlikely the ‘partial deal’ will do much to give certainty to firms investment and hiring decisions in the US or elsewhere,” he cautioned.
Futures imply around a 72 per cent chance the Federal Reserve will cut interest rates at its meeting later this month.
The progress on trade was still enough to slug safe-haven bonds with yields on US 10-year Treasury notes climbing 23 basis points last week to stand at 1.74 per cent.
The yield curve also steepened as short-term rates were held down by news the Fed would start buying about $US60 billion ($A88 billion) per month in Treasury bills to ensure “ample reserves”.
The rally in risk assets saw the yen ease across the board and the dollar was steady at 108.40 early on Monday after hitting a 10-week top around 108.61 on Friday.
The dollar fared less well elsewhere, partly due to a jump in sterling, and was last at 98.431 against a basket of currencies.
The dollar also dipped on the Chinese yuan to stand at 7.0868.
The pound was trading cautiously at $1.2608 having surged to a 15-week high around $1.2705 on Friday on optimism Britain could reach a deal on Brexit.
However Downing Street and the EU say more work is needed to secure an agreement.
The general improvement in risk sentiment saw spot gold ease another 0.4 per cent to $1,483.90 per ounce.
Oil prices steadied after an Iranian oil tanker was attacked in the Red Sea.
Investors were also anxiously watching as the White House threatened to impose heavy sanctions on Turkey.
Brent crude futures were up 8 cents at $60.59, while US crude rose 9 cents to $54.79 a barrel.