HONG KONG -- Asian markets mostly dropped Tuesday as the previous day’s euphoria over the China-US trade ceasefire gave way to questions about whether the two can ultimately resolve their differences.
However, oil prices continued to rise, building on Monday’s surge fuelled by the agreement as well as news of a Russia-Saudi Arabia pact to cap output.Global investors were given some much-needed Christmas cheer at the weekend after Donald Trump and Xi Jinping called a halt to their painful tariffs battle for 90 days while they try to resolve their differences.
The news lit a fuse under markets after a torrid year that has been dominated by the trade war between the world’s top two economies, which many fear will hit global growth.However, there is concern that the three month grace period will not be enough for them to hammer out agreements on key issues, particularly on intellectual property protection. ”Can the US and China really resolve their differences in 90 days?” asked Rodrigo Catril, senior strategist at National Australia Bank.”It seems that more details and signs of progress will be needed if the initial trade truce warm fuzzy feeling is to be sustained.”Also, later Monday there was uncertainty about Trump’s claims in a tweet that China had agreed to slash tariffs on car imports, with two of his top advisers unable to provide clarity on the issue.
Oil extends gains
”That’s what happens when you don’t have the detailed negotiations going into the summit” and end up with the “broad swath of a 35,000-foot deal,” Bonnie Glaser, a China expert at the Center for Strategic and International Studies in Washington, said.”It’s risky.
There’s certainly no guarantees that it will produce the outcomes that we want.”Hong Kong dipped 0.3 percent, Tokyo fell 0.7 percent by lunch, Shanghai was 0.2 percent off and Sydney lost 0.6 percent.
Singapore and Seoul each dropped 0.5 percent, while Taipei eased 0.3 percent though there were gains in Wellington, Manila and Jakarta.