Asian Markets Mixed After China, U.S. Agree to Pause Trade War

Investing.com - Asian markets were mixed in morning trade on Tuesday after the U.S. and China declared a truce in their trade war.

U.S. President Donald Trump and his Chinese counterpart Xi Jinping promised to halt the introduction of new tariffs for 90 days, according to Chinese Foreign Minister Wang Yi.

The White House also called the meeting “highly successful”, adding that the U.S. would leave existing tariffs on Chinese imports at 10% and refrain from increasing the rates as previously planned on Jan. 1.

However, White House Press Secretary Sarah Huckabee Sanders said in a statement that the U.S. would raise those tariffs to 25% if no progress on structural reform from China were made after 90 days.

Meanwhile, White House economic adviser Larry Kudlow said on Monday in a briefing on trade talks that the two countries are “pretty close on some agreements on IP theft, pretty close to some agreements on the forced transfer of technology from American companies.”

“When I say pretty close, they are kind of on the front burner, hot list that we’ve developed with them,” said Kudlow.

He then added that he expects China would reduce tariffs on autos imported from the U.S. to “zero.” Beijing currently imposes a 15% tariff on imported vehicles and raised the levy on U.S. cars to 40% in retaliation for tariffs the Trump administration imposed on Chinese products.

In Asia, the Shanghai Composite traded 0.04% higher to 2,656.0, while the Shenzhen Component slipped 0.1%. Hong Kong’s Hang Seng Index edged up 0.2%.

Yi Gang, governor of the People’s Bank of China, said in an interview with the state-owned China Finance magazine that the central bank would keep its monetary policy flexible, but tools he described as a "slow release of air" and "soft landing" must be used when the economy begins overheating.

The central bank would also promote the opening up of China’s financial industry to technology to enhance international confidence in the yuan, said Yi.

Meanwhile, Japan’s Nikkei fell 1.3%. Sharp Corp (T:6753)’s share prices plunged more than 4% in morning trade following reports that the company has laid off more than 3,000 foreign workers in Japan.

Elsewhere, South Korea’s KOSPI declined 0.7%, while Australia’s ASX 200 fell 0.9%.

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