The meetings this week which are the first ever face-to-face talks since U.S. President Donald Trump and his Chinese counterpart Xi Jinping agreed to a 90-day truce have rejuvenated risk appetite, easing fears of an all-out trade war and its possible impact on global growth. Earlier, U.S. and Chinese officials said progress had been made during the three days of talks in Beijing. While major hurdles remain, the talks appeared to clear a path for higher-level negotiations that could further ease trade tensions before President Donald Trump's March deadline, when he said he will raise tariffs on more than $200 billion in Chinese-made good from 10% to 25%.
The Chinese Ministry of Commerce (MOFCOM) said in a statement on Thursday morning that the two sides had "broad, in-depth and detailed" exchanges on trade and structural issues of shared concern. The talks have strengthened mutual understanding and laid the foundation for addressing both sides' concerns, adding that the two countries also agreed to keep close contact. The MOFCOM's brief statement followed one from the Office of the US Trade Representative (USTR), which also listed several issues discussed at the trade talks, the first face-to-face meeting after the leaders of the two countries reached a truce in December. The USTR said in its statement that the trade talks discussed ways to achieve fairness, reciprocity and balance in trade relations and the need for any agreement to have a verification process. The discussions also focused on China's pledge to buy "a substantial amount of agricultural, energy and other products from the US," it said."The delegation will now report back to receive guidance on the next steps," the USTR said, echoing China's statement on keeping close contact. The MOFCOM's statement was more concise and did not mention specific topics compared to the USTR one, which listed specific topics, most of which have been the country's long-held grievances against China.
The cost of producing goods in China's factories slowed sharply in December, a sign demand remains weak as the US trade war drags on, while consumer inflation also flagged, official data showed Thursday. The producer price index (PPI) -- an important barometer of the industrial sector that measures the cost of goods at the factory gate -- rose 0.9% on-year in December, compared with a 2.7% rise the previous month. The reading marks the lowest growth since September 2016, and fell short of market expectation. A slowdown in factory gate inflation reflects sluggish demand, while a turn to deflation could dent corporate profits. The consumer price index (CPI) -- a key measure of retail inflation -- rose 1.9%, compared with 2.2% in November. Rapidly falling inflation, especially factory-gate PPI inflation, is further evidence that China's economy is slowing at a worrying pace. Slumping PPI inflation suggests corporate earnings will almost surely continue to fall in coming months. The weak figures come as China's trade war with the US starts to bite and economic growth slows, with data last week showing manufacturing sector contracted in December for the first time in more than two years.
Shares of energy stocks were higher, as oil prices had rallied on hopes of a possible thaw in the Sino-U.S. trade spat, while OPEC-led crude output cuts also provided support. Sector heavyweight Woodside Petroleum strengthened as much as 1.7% to a more than one-and-a-half month high, while Santos Ltd climbed 1.1%.
Shares of material sector declined, with BHP falling A$1.16 to A$33.14, after the market giant paid shareholders a fully franked special dividend of A$1.43 per share following the sale of its shale oil assets, while Fortescue Metals and Bluescope Steel each suffered losses of more than 1.2%.
Shares of financials were up, with ANZ the biggest gainer, up 0.56%, followed by Westpac, up 0.35%.
CURRENCY: Australian Dollar was tad higher against greenback and against a basket of other peers on Thursday. The Australian dollar was quoted at 71.84 US cents, from 71.55 US cents on Wednesday.
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