Markets on high alert as US and China talks enter second day

Global markets are on high alert on Tuesday as investors patiently wait for progress talks between US and China

US and China market volatility Source: Bloomberg

Market jitters kicked in on Tuesday as investors awaited updates, as US and China negotiations in Beijing enter their second day with hopes of reaching an agreement.

US officials met with Chinese decision makers in Beijing on Monday for the first day of the talks, after US president Donald Trump and Chinese president Xi Jinping agreed in December to a 90-day truce.

The anticipation had investors on high alert, triggering market volatility in currency and local bond markets.

Analysts say if talks end well removal of trade tariffs would put the global economy back on track and would be less likely to spark any further US rate hikes.

IG market analyst, Kyle Rodda says any positive outcome would be met with cautious optimism

'Hypothetically, if the trade war was to end, it would be a massive boost to sentiment. Risk appetite would be piqued. The Australian Dollar would likely lift.

The ASX200 would be a big beneficiary, but global stocks would rally in unison. Emerging market currencies would climb. Bonds would fall in the expectation that a trade war resolution would support a slowing global economy.' Mr. Rodda said.

Australian shares rise on high hopes

Australian shares rose on Tuesday as investors were hopeful that Beijing and Washington would be close to reaching a deal.

The S&P/ASX 200 index rose 0.40% or 21 points on Tuesday at time of writing, while the benchmark climbed 1.1% on Monday.

Index heavyweight Australia & New Zealand Banking Group Ltd jumped 0.5% to a seven-day high, while Westpac Banking Corp strengthened 0.7%.

Energy stocks also advanced upon positive sentiment, held up by a surge in oil prices.

The Australian dollar recovered back above $0.70, after dipping below during last week’s flash crash.

The NZD/USD also paused at $0.6745.


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