U.S. stocks reversed early losses overnight, which had come after China unveiled plans for additional tariffs on 106 U.S. products on Wednesday, as overtures were made regarding potential negotiation between the two countries.
“No date has been set for the proposed tariffs put forward by China or the U.S., meaning we could see uncertainty continue for the next couple of months. This also means negotiation is still firmly on the table,” ANZ analysts said in a morning note.
The juxtaposition between the ongoing U.S.-China tit-for-tat and hopes for trade talks is likely to be in focus among investors.
“Our base case … remains that negotiation and de-escalation will be the likely endgame. Having said that, China’s proportionate response has increased the risks of further escalation in ‘rhetoric’ in the coming weeks,” said Morgan Stanley analysts in a note.
European stocks had come under pressure following China’s announcement of those trade measures, which came before the U.S. market open.
The additional tariffs announced by China on Wednesday came less than a day after the U.S. unveiled the list of Chinese imports, including high-tech products, that could be targeted in response to what the White House deems an unfair trade relationship.
The dollar extended gains against the safe-haven yen following Wall Street’s overnight rebound, trading at 106.81 by 9:07 a.m. HK/SIN. That compared to levels around the 105 handle seen at the beginning of the week.
Meanwhile, the dollar index, which tracks the U.S. currency against six peers, was steady at 90.084.