Asian stocks reached a more than four-month high on Wednesday, lifted by optimism that the United States and China might be able to hammer out a deal to resolve their nearly year-long trade dispute. U.S. President Donald Trump said on Tuesday that he could see letting the March 1 deadline for reaching a trade agreement with China “slide for a little while,” if the two sides were close to a complete deal. Officials in Washington and Beijing had expressed hopes that a round of talks this week would bring them nearer to easing their seven-month trade war. The focus for the markets is the high-level talks this week in China, where the world’s two largest economies attempt to hammer out a trade deal. Financial markets have been rattled by the trade tensions over the past year, with business sentiment taking a hit globally as the fallout of the U.S.-China dispute disrupted factory activity and hurt global growth.
In currencies the dollar was on the defensive as investors shifted their money to riskier assets amid hopes for a U.S.-China trade deal. The dollar’s index against six major currencies stood at 96.66 after its eight-day winning run came to an end overnight to push it away from a two-month peak. EURUSD was a shade higher at 1.1336 having gained 0.5 percent the previous day, when it bounced from a three-month low of 1. 1258.USDJPY edged up as much as 0.2 percent to 110.705 yen, its highest level in 1-1/2 months. GBPUSD gained 0.1 percent to $1.2900. Traders expect the British pound to remain volatile over the coming weeks as a Brexit deadline looms. The United Kingdom is on course to leave the European Union on March 29 without a deal unless Prime Minister Theresa May can persuade the bloc to amend the divorce deal she agreed last year.
Sterling remained closer to the two-week low as investors continue to worry about the probability of a no-deal Brexit. This week, the European Union has warned about the increasing chances of having a no deal arrangement. Today, investors will focus on the Bank of England (BOE), which will release the interest rates decision. The bank is expected to leave interest rates unchanged at 0.75%. Traders will keep a close eye on the bank’s view of Brexit and outlook for the year.
In commodities U.S. West Texas Intermediate crude oil futures were up 1.0 percent at $53.65 per barrel after rallying 1.3 percent, while International Brent crude futures were up 1.0 percent at $63.07 per barrel.
Oil prices surged on Tuesday after OPEC figures showed it cut production sharply in January, and as lead member Saudi Arabia said it would reduce its output in March by an additional 500,000 barrels.