After the last trade talks fell apart in May 2019, US President Donald Trump and China’s President Xi Jinping finally agreed to revive talks after speaking to each other at the G20 summit in Japan. Trump agreed to hold off from imposing the additional 25 percent tariff on $300 billion worth of Chinese goods and ease certain restrictions on tech company Huawei. As a gesture of goodwill, China agreed to make unspecified new purchases of US agricultural products.
The US-China trade ceasefire provided some much-needed relief and sent all three major US indices to close at record-high levels in a holiday-shortertened session ahead of US Independence Day. The Dow Jones Industrial Average rose 0.8 percent to close at 26,966, the S&P 500 gained 1.4 percent to 2,995.82 and the tech-rich Nasdaq Composite Index advanced one percent to 8,129.57.
Investors now turn their focus to the release of US jobs data on 5 July 2019 while hoping a weak reading would further pressure the US Federal Reserve into slashing interest rates.
Elsewhere in Asia, markets took the lead from Wall Street with Japan’s Nikkei 225 adding 2.3 percent to close at 21,746.38. Shanghai Composite Index remained flat at 3,011.06 while Hang Seng Index rose 1.1 percent to close at 28,774.83 as the trade truce overshadowed a night of historic violence that saw protesters storm the city’s legislature before being dispersed by police.
On the local front, Monetary Authority of Singapore (MAS) is considering allowing a real estate investment trusts (Reits)’ leverage to exceed 45 percent but not more than 50 percent, if the Reits havea minimum interest coverage requirement (ICR) of 2.5 times. Also in the spotlight, Capitaland will merge Ascott Residence Trust (Ascott Reit) with Ascendas Hospitality Trust (A-HTrust) to form the largest hospitality trust in Asia-Pacific and the eighth biggest globally with a total asset value of $7.6 billion. A-HTrust will become an unstapled trust and delist following the merger.
Over the fortnight, the local benchmark Straits Times Index (STI) advanced 1.4 percent to end at 3,366.81.