Japan US Negotiations Start – Asia Market Wrap

Asian stocks nudged higher and the yen weakened as investors took heart from a first round of trade negotiations between the US and Japan.

Japanese shares gained slightly after President Donald Trump said there was “big progress” in talks to strike a deal for Japan to avoid higher levies. The yen weakened after the country’s chief trade negotiator said currencies weren’t discussed, allaying concerns a stronger exchange rate would be part of the US demands. Gold hit a record in demand for safe havens while Treasury yields and a gauge of the dollar inched up.

After financial markets were roiled following the announcement of broad US levies earlier this month, global investors have turned their attention to how the country-specific negotiations progress before taking large positions. One big uncertainty is the fate of discussions with China after Beijing indicated Wednesday it wants to see a number of steps from Trump’s administration before it will agree to trade talks.

A two-day consolidation in stocks ended Wednesday after the US ratcheted up trade tensions by putting restrictions on some chip exports by Nvidia Corp. Stocks also declined after Federal Reserve Chair Jerome Powell signaled a wait-and-see approach to tariffs. He pushed back on hopes the central bank would act quickly to soothe investor fears.

Treasuries, however, rallied for a third day on Wednesday as investors refocus on the asset as a hedge against risk. Last week, the debt had sold off amid speculation that hedge funds were unwinding positions.

Meanwhile, the US and Japan kicked off tariff negotiations with an aim to reach a deal as soon as possible, Japan’s top negotiator Ryosei Akazawa said. Preparations are underway for the second round of talks to take place later this month, he said.