Anxious Asian investors desperate for good news of any kind latched onto the dubious words of president Donald Trump that trade discussions with China were "moving along nicely" to send shares in Asia hitting three-week highs on Friday. The U.S. dollar also weakened somewhat.
They even kept their optimism when Washington, later on, levied sanctions on two companies based in China and Taiwan and three individuals. The U.S. Department of Justice said the firms and individuals they conspired to steal trade secrets from U.S. semiconductor company Micron Technology Inc.
Asian bourses rose from 2.5 percent to 4 percent in early trading on the news Trump and Chinese president Xi Jinping was talking. MSCIEF, the world's main emerging market index, rose three percent and was on course for its best day and week since early 2016.
At the end of the trading day, Hong Kong's Hang Seng index jumped 4.21 percent. China's Shanghai composite and Shenzhen composite each surged more than 2.5 percent. South Korean, Japanese and Australian stocks also ended the trading day higher on the back of the report that Trump asked officials in his administration to start drafting a potential trade deal with Beijing.
Trump earlier said he just had a long and very good conversation with Xi. They talked about many subjects, with a heavy emphasis on trade. Trump claimed these discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina.
Sources in Washington said Trump wants to reach a trade agreement with China at the G20 meeting. What isn't known if Trump ordered his staff to draft an agreement that is tantamount an instrument of surrender by China, or one that will outline topics for discussion in Argentina.
What is certain is Trump will insist China stop stealing U.S. intellectual property, an allegation China resolutely denies.
Xi earlier said he hopes China and the U.S. will be able to promote a steady and healthy relationship. Xi said he will meet Trump in Argentina.
Speaking on state-run television, Xi said trade teams from China and the U.S. should strengthen contact and conduct consultations on issues of concern to both sides. Both sides should also promote a plan that both can accept to reach a consensus on the China-U.S. trade issue.
Xi confirmed his call with Trump and said both he and Trump had hoped to expand trade cooperation. Neither revealed any details of their upcoming talks.
But there's one sticking point that might ruin the talks. Trump administration officials said trade talks with China won't resume until China comes up with specific actions it is willing to take to meet U.S. demands for sweeping changes to policies on technology transfers, industrial subsidies and market access.
