HK Shares Join Asian Rally As Trade Fears Recede

Hong Kong and mainland stocks kicked the week off with healthy gains on Monday after the United States and China agreed to drop planned tariffs and pull back from the brink of a trade war.

The Hang Seng Index rose 0.6 percent, to 31,234.

On the mainland, the Shanghai Composite Index jumped 0.6 percent, to 3213 and the Shenzhen Composite Index rose 1.1 percent, to 1848.

While short on detail, the announcement in Washington provided much relief to investors, who had been fearing the imposition of levies on billions of dollars of exports between the two sides.

"The latest statement on the China-US trade suggests both parties are happy to avoid the dreaded tit-for-tat escalation while working towards a more market-friendly bilateral trade agreement," said Stephen Innes, head of Asia-Pacific trade at Oanda.

Tokyo added 0.3 percent as the weaker yen helped Japanese exporters.

Singapore added 0.8 percent and Seoul gained 0.2 percent, while Taipei rallied 1.3 percent. However, Sydney dipped 0.1 percent and Wellington shed 0.5 percent.

The greenback was sitting at its highest level against the euro since December, while it was at a four-month peak against the yen.

"After the US-China agreement on backing off from imposing trade tariffs on each other, one risk-off factor was removed, which pushed the dollar up against the yen," said Marito Ueda, senior dealer at FX Prime in Tokyo..

Traders are awaiting the release on Wednesday of minutes from the Federal Reserve's latest policy meeting, hoping for fresh clues about its plans for raising interest rates. (AFP)