Seats are elusive in US trade musical chairs

Official trade data due to be released on Wednesday also are expected to show the USA trade deficit in goods with the world hitting a new record in 2018 because of the combination of a surge in imports to get ahead of the new tariffs previous year and slowing exports.

The Wall Street Journal said negotiations in February had narrowed key differences and an agreement could be ready for signing at a summit between US President Donald Trump and his Chinese counterpart Xi Jinping later this month.

The two nations have imposed tit-for-tat tariffs on billions of dollars worth of each others' goods, roiling financial markets, disrupting manufacturing supply chains and shrinking US farm exports.

Backstory. On Feb. 24, President Trump postponed a set of additional $200 billion in tariffs on Chinese goods that were set to go into effect on March 1, saying that the US and China were making progress in trade talks.

With Asian and European markets already in positive territory, the Dow Jones index joined the upbeat mood as trading got underway in NY. The pan-European STOXX 600 index was up 0.4 percent.

Put another way, by Trump's own benchmark, the U.S. is 20% worse off than it was at the end of 2016, just before he took office.

All of that proved positive for risk sentiment with E-mini futures for the S&P500 and the Dow gaining 0.4 percent each while Japan's Nikkei futures climbed 0.6 percent. But they cautioned the two sides still were negotiating on the issue that sparked the dispute: Chinese plans for state-led creation of global technology competitors that Washington, Europe and other trading partners say violate Beijing's market-opening obligations.

Hong Kong's Hang Seng advanced 0.7 per cent to 29,012.17 and Seoul's Kospi lost 0.2 per cent to 2,190.66. France's CAC 40 gained 0.6 per cent to 5,296.

Still, tariffs so far have proven to be a blunt weapon.

POLICY EASING? March is expected to be a crucial month for global markets.

As previously scheduled, the US President had also delayed tariffs on Chinese goods.

Tai Hui, Asia-Pacific chief market strategist at JP Morgan Asset Management, said that while there were a number of hurdles to a final agreement such as on intellectual property rights, traders were broadly confident. Still, U.S. stocks have regained most of their losses from the autumn when investors were more pessimistic about trade prospects.

In a separate report released recently, economists from the University of California at Los Angeles, Yale, UC Berkeley, Columbia and the World Bank estimated, "Annual losses from higher costs of imports are $68.8 billion (0.37% of GDP)".

The euro held in familiar ranges and was last at $1.1376. Most of those bets are positioned to take advantage of higher US interest rates. The contract fell $1.40 on Friday to $55.80.

The risk-on mood also sent the Australian and New Zealand dollars higher.

  • Eleanor Harrison