Asian stock markets were broadly higher on Wednesday after Wall Street indexes hit three-week peaks on Tuesday, following news that the U.S.-Sino trade talks would extend into an unexpected third day of negotiations. Hong Kong’s Hang Seng Index soared 2.65 percent by 1.54 p.m. HK/SIN, while South Korea’s Kopsi was up 2.11 percent. Both of China’s benchmark indexes, the Shanghai Composite and the Shenzhen Composite were higher, up 1.63 percent and 1.70 percent respectively. The surges were prompted by renewed trader optimism that a trade deal would be made between the two economic powerhouses.
Oil prices were also higher on Wednesday, with U.S. WTI futures up 1.53 percent to $50.54 per barrel, and Brent crude futures trading at $59.51 per barrel, up 1.35 percent on expectations that a new trade deal would increase demand. U.S. WTI futures crossed the important $50 per barrel mark for the first time in 2019.
The U.S. dollar struggled against its primary trading partners as increased risk appetite had traders favoring riskier currencies. The Australian dollar enjoyed most of the gains by Wednesday afternoon, gaining 0.21 percent against the greenback to trade at 0.7154. Commodity-backed currencies like the Aussie and the Canadian dollar tend to flourish as optimism and oil prices rise, and the announcement of continued trade talks provided just the optimism necessary to boost these currencies.
The British pound and the euro also traded higher against the dollar, both up 0.17 percent. The rally for riskier assets began last Friday when Federal Reserve Chairman Jerome Powell commented that he would remain flexible in policy decisions in 2019.