Asian stocks stay lukewarm after US, China trade talks

Asian stocks edged up 0.2% and US equity-index futures dipped 0.3% as investors searched for details from the talks in London.

Financial markets showed little enthusiasm despite optimistic tone from the US and Chinese officials after two days of talks aimed at diffusing trade tensions.

Asian stocks edged up 0.2% and US equity-index futures dipped 0.3% as investors searched for details from the talks in London. Mainland China shares gained 0.9% and those in Hong Kong advanced 0.7%. Indexes in Japan and South Korea pared their gains at the open. The dollar edged higher marginally and gold rose 0.4%. Yields on 10-year Treasuries dipped about 1 basis point to 4.46%, ahead of Wednesday’s US inflation reading.

The US and China de-escalated trade tensions, agreeing to a preliminary deal on how to implement the consensus the two sides reached in Geneva, negotiators for both sides said. While the full details of their accord weren’t immediately available, US negotiators said they “absolutely expect” that issues around shipments of rare earth minerals and magnets will be resolved with the framework implementation.

“While both sides touted progress at the London talks, there is still work to be done to get a concrete agreement in place, which leaves room for potential hiccups and uncertainty,” said Tim Waterer, chief market analyst at KCM Trade in Sydney. “These factors may cap enthusiasm on Asian markets today.”

Financial markets were closely watching whether the world’s largest economies can find a way to tamp down trade tensions that economists say have tipped the world economy into a downturn, with the US among the hardest hit. Despite the modest moves Wednesday, global stocks are still at a record high, having recovered from their April lows as President Donald Trump suspended his tariffs until July 9.

Talks in London came after the US and China accused each other of reneging on a deal reached in May in Geneva, where they tried to start dialing back the trade war.

Ahead of the talks, China granted approval to some applications for the export of rare earths. Boeing Co. has also begun shipping commercial jets to China for the first time since early April, indicating a reopening of trade flows.

“With structural issues like chip controls and national security are still unresolved, I’d expect gains to be cautious rather than euphoric,” said Charu Chanana, chief investment strategist at Saxo Markets.

In other tariff news, a federal appeals court allowed Trump to continue enforcing his global tariffs.

Meanwhile, data Wednesday is expected to show US consumers probably saw slightly faster inflation in May, notably for merchandise, as companies gradually pass along higher import duties. That may reinforce the Federal Reserve’s wait-and-see stance toward further easing as it assesses the impact of tariffs, with traders increasingly betting that the central bank will cut interest rates just once this year.

Prices of goods and services, excluding volatile food and energy costs, are expected to show a 0.3% advance in May, the most in four months.

The so-called core consumer price index, which is regarded as a better indicator of underlying inflation, is seen accelerating for the first time this year — to 2.9% — on an annual basis, based on the median projection.