Asian shares paused near an eight-month peak on Thursday as investors awaited developments on trade talks between the United States and China, who appear closer to signing a deal, nudging bond yields higher globally and softening the safe-haven yen.
MSCI’s broadest index of Asia-Pacific shares outside Japan took a breather after five straight days of gains took it to its highest since late August.
Japan’s Nikkei was also flat to stay near a recent one-month top.
Risk sentiment this week was helped by media reports touting progress in Sino-U.S. trade talks. Bloomberg reported on Thursday the U.S. wanted to set a 2025 target for China to meet trade pledges.
The plan would see China committing to buy more U.S. commodities, including soybeans and energy products, and allow full foreign ownership for U.S. companies operating in China as a binding pledge.
On Wednesday, the Financial Times reported the United States and China were closer to reaching a final trade agreement.
“We may get similar optimistic remarks this week, something that could keep risk appetite supported, but, still, a final and sealed accord remains unlikely,” said Charalambos Pissouros, Cyprus-based senior market analyst at JFD Group.
“The sealing of a deal is expected to happen at a meeting between U.S. President Trump and his Chinese counterpart Xi Jinping, which according to market chatter could even happen in June,” he added.
“It would be interesting to see whether these talks will open the door for the meeting to happen earlier than anticipated.”
Overnight, Wall Street edged higher to extend a strong start to the quarter as a rally among chipmaker shares provided a boost to the broader market.
The Dow rose 0.15 percent, while the S&P 500 gained 0.21 percent and the Nasdaq 0.6 percent.
Moves in the currency market were miniscule in early Asian hours after bigger swings overnight. All the major currencies gained on the safe-haven yen with the risk-sensitive Australian dollar touching a five-week high.
The greenback eased against a basket of currencies to 97.031. The euro edged up to $1.1246, while reaching a two-week top on the yen at 125.45.
Sterling gained to $1.3179 after Prime Minister Theresa May held talks with the opposition Labour party in a bid to break the Brexit deadlock that may lead to a softer departure deal with the EU.
The lower house of Britain’s parliament late on Wednesday also narrowly passed legislation which would force May to seek a delay to Brexit in order to prevent the risk of leaving without a deal on April 12.
In commodity markets, spot gold nudged up to $1,292.21 per ounce.
Oil prices weathered U.S. government data that showed a surprise build in crude inventories, with futures near their highest in almost five months as OPEC-led output cuts and sanctions on Iran tightened the supply outlook.
U.S. crude eased 4 cents to $62.42 while Brent crude rose 10 cents to $69.41.