Asian markets mostly down as China-US trade deal joy fades

Asian markets mostly down as China-US trade deal joy fades

-China trade war boosted global stocks to their highest in about three weeks on Monday, while sending the dollar lower and the Chinese yuan and several trade-dependent currencies higher. Asian shares were mostly lower Tuesday as investors wondered if a 90-day tariff truce was enough for the USA and China to resolve a range of issues from technology development to trade.

Asian shares fell on Tuesday as a relief rally petered out amid rising doubts over whether China and the United States will be able to resolve trade differences.

The rally that we are experiencing goes to show that in spite of the trade tensions between the United States and China is seen as bilateral issues between themselves, that as two major economic powers in the world it does have huge ramifications for global market optimism.

The Dow Jones Industrial Average rose 287.97 points, or 1.13 percent, to 25,826.43, the S&P 500 gained 30.2 points, or 1.09 percent, to 2,790.37, and the Nasdaq Composite added 110.98 points, or 1.51 percent, to 7,441.51. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.6 percent.

U.S. President Donald Trump said China has agreed to "reduce and remove" tariffs below the 40 percent level that is now being charged on U.S. -made vehicles.

On oil markets both main contracts posted more healthy gains, adding more than one percent, having racked up gains of nearly four percent Monday on the trade deal, the Russia-Saudi output agreement and a cut in production in Canada.

There was added confusion over when the 90-day period, during which the US and China would hold off on imposing more tariffs, would start.

MSCI's all-country world index climbed 0.25 percent, marking its sixth consecutive day of gains. Stocks finished solidly higher on Wall Street as investors welcomed news of a 90-day truce in the trade battle between the US and China.

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"The G20, the dinner in particular, has ignited quite a robust risk rally and that's coming at the dollar's expense", said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. China's offshore yuan CNH= gained about 1 percent to 6.8796. Against the dollar, the pound fell to its lowest since October at US$1.2708, down almost 0.7 per cent from the day's highs.

The New Zealand dollar gained 0.8 percent, while the US dollar lost 0.8 percent against the Canadian dollar.

"The parliamentary debate should reiterate the divisions between and within the political parties, pointing to a low likelihood of the Brexit deal being voted through in Parliament next week", said Petr Krpata, an currency strategist at ING. The South Korean won, which is often measured as the Asian currency proxy for investor appetite towards risk is higher by more than 0.85% while the Chinese Yuan is stronger by as much as 0.7%.

Adding to worries over the outlook for the global economy, the yield curve between US three-year and five-year notes, and between two-year and five-year paper inverted on Monday - the first parts of the Treasury yield curve to invert since the financial crisis, excluding very short-dated debt. Yields on two maturities at the front of the curve rose above longer-dated 5-year notes for the first time in more than a decade.

Germany's 10-year government bond, the benchmark for the euro area, initially rose four basis points to 0.347 percent DE10YT=RR , then eased to 0.3 percent.

Focus is now on a meeting of OPEC and non-OPEC members in Vienna at the weekend, where they will reveal how much and for how long they will reduce output as they look to stabilise the crude market.

US crude oil futures settled at $52.95 per barrel, up 3.97 percent.

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