News of the talks was met with excitement on stock markets, with Hong Kong, Shanghai, Singapore, Sydney, Seoul, Taipei, Wellington, Manila, Bangkok and Jakarta all in positive territory.
Tokyo fell with London and Paris. Frankfurt was flat.
Pakistan’s stock index sank more than 6 per cent at the open but India’s Sensex was flat after the two countries exchanged heavy artillery fire along their contested frontier on Wednesday.
The clashes came after New Delhi launched missile strikes on Pakistan in a major escalation between the nuclear-armed neighbours following a deadly attack on the Indian-run side of Kashmir that India blames on Pakistan.
“Just as everyone’s throwing in the towel-calling end-of-days on the ‘Trump Trade War’ – the White House quietly unleashes a ‘trade deal’ teaser to yank markets off the cliff,” said Stephen Innes of SPI Asset Management.
“Traders who’d battened down the hatches are now scrambling to hoist sails, chasing any whiff of tariff relief like it’s pure alpha.”
Investors were also cheered by Beijing’s decision to cut a key interest rate and lower the amount of cash banks must keep in reserve – a move aimed at boosting lending – in its latest bid to reignite the stuttering economy.
The People’s Bank of China also said it would cut the rate for first-time home purchases with loan terms over five years as it continues to grapple with a property sector crisis that has hammered economic growth.
“The market has been expecting for monetary stimulus since the start of the year to boost credit growth and counter external uncertainty,” said David Chao at Invesco.
“Therefore today’s rate cuts are likely to satisfy the market’s demand for stimulus, at least for a while.”
In Washington, the Federal Reserve is expected to hold interest rates again later on Wednesday, though traders will be keeping a close eye on its post-meeting statement for an idea about its plans in light of Trump’s tariffs and his pressure to make more cuts.
