Asian and European markets mostly rose on Tuesday with investors taking reassurance from news that China and the US had agreed to press on with their trade pact, while hopes for a virus treatment provided extra support.
The gains followed yet another record day on Wall Street as coronavirus cases appear to be slowing in the US, but also as Europe sees a worrying surge and as Hong Kong researchers identified what they said was the first confirmed case of re-infection.
China and the US provided dealers with some much-needed cheer after announcing top representatives had held phone talks on their trade agreement signed in January.
There had been concerns about the future of the deal as the countries’ relations grow increasingly fraught over issues including Hong Kong, the virus, Huawei and TikTok.
But on Tuesday, the Ministry of Commerce said Vice-Premier Liu He spoke to US Trade Representative Robert Lighthizer and Secretary of the Treasury Steven Mnuchin, and both sides “agreed to create conditions and atmosphere to continue to push forward the implementation of the phase-one of the China-US economic and trade agreement”.
The US side added in a separate statement that the two had discussed steps China had agreed to address in the agreement, including intellectual property and forced technology transfer.
It said: “The parties also discussed the significant increases in purchases of US products by China as well as future actions needed to implement the agreement.
“Both sides see progress and are committed to taking the steps necessary to ensure the success of the agreement.”
While there was an expectation the deal would remain intact, the news will take away one key matter of concern for investors.
Tokyo, Seoul and Singapore all jumped more than one per cent, while Sydney gained 0.5 per cent and Taipei put on 0.9 per cent with Mumbai gaining 0.1 per cent. Manila, Bangkok and Jakarta were also higher.
London, Paris and Frankfurt all rose in the morning. However, Hong Kong and Shanghai ended slightly lower.
Markets were already buoyant on growing optimism that a vaccine for the coronavirus is close, with US President Donald Trump said to be considering fast-tracking an experimental treatment from Britain that could be ready for use by November.
That followed news that the US Food and Drug Administration is looking to expand access to a virus treatment involving blood plasma from recovered patients.
Stephen Innes at AxiCorp said: “A vaccine and possible treatment raise hope that in the not-too-distant future, symptoms of Covid-19 infections may become relatively mild, like a cough and runny nose caused by influenza, and possibly the vaccine could even provide a cure.
“But in either outcome, the Covid-19 flu will no longer pose a significant health risk, and the economy could return to standard quicker. Indeed, the ultimate one-stop recession plugger could be but a trip to your local clinic.”
Attention is on this week’s virtual meeting of central bankers, with the key event being a speech by US Federal Reserve chief Jerome Powell, hoping he provides an update on the world’s top economy and some forward guidance on his plans for monetary policy.
