Asian shares inch higher as markets await Trump-Xi talks amid trade tensions  

BEIJING: Asia shares edged slightly higher on Tuesday while the dollar fell to a six-week low as erratic US trade policies clouded market sentiment and investors turned defensive ahead of key developments later in the week.  

US President Donald Trump and Chinese leader Xi Jinping will probably speak this week, White House Press Secretary Karoline Leavitt said on Monday, days after Trump accused Beijing of violating an agreement to roll back tariffs and trade restrictions.  

The call between the two leaders will be closely watched by markets, which have been roiled by tariff-induced trade tensions between the world’s two largest economies that continue to simmer.  

Data on Monday showed US manufacturing contracted for a third straight month in May and suppliers took the longest time in nearly three years to deliver inputs amid tariffs.  

“The May ISM showed tariff pressure is beginning to bite for manufacturers who are seeing slowing activity, longer lead times and declining inventories,” said economists at Wells Fargo.  

China’s factory activity in May also shrank for the first time in eight months, a private-sector survey showed on Tuesday, indicating US tariffs are starting to hurt manufacturers.  

The gloomy global trade situation left US futures falling in the Asian session, failing to sustain the slight gains made during the cash session on Wall Street overnight.  

Nasdaq futures and S&P 500 futures were both down more than 0.3 per cent each. In Europe, EUROSTOXX 50 futures and FTSE futures were up just 0.1 per cent.  

MSCI’s broadest index of Asia-Pacific shares outside Japan reversed early losses to last trade 0.4 per cent higher, while Japan’s Nikkei rose 0.1 per cent.  

“Trump really does have sentiment in the palm of his hands once again,” said Matt Simpson, senior market analyst at City Index.  

“I suspect we’ll hear about ‘a really great call’ or words to the effect,” he said, referring to the expected call between Trump and Xi.  

“But we’ll need to wait for confirmation from China, who tends to take their time on these matters. Until we get concrete confirmation, price action could be shaky and vulnerable to false breaks … we also have the June 4 deadline for ‘best trade deals’ from US trading partners to factor in.”  

The Trump administration wants countries to provide their best offer on trade negotiations by Wednesday as officials seek to accelerate talks with multiple partners ahead of a self-imposed deadline in just five weeks.  

In China, mainland markets returned from an extended break on a muted note, with the CSI300 blue-chip index up 0.3 per cent while the Shanghai Composite Index gained 0.4 per cent.  

Hong Kong’s Hang Seng Index jumped more than 1 per cent, rebounding from Monday’s one-month low.  

The dollar fell to a six-week low against a basket of currencies early on Tuesday, ahead of Friday’s US nonfarm payrolls data, which will offer a timely reading on the health of the world’s largest economy.  

A rise in unemployment is one of the few developments that could get the Federal Reserve to start thinking of easing policy again, with investors having largely given up on a cut this month or next.  

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