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Asian markets mostly dropped Tuesday as the previous day’s euphoria over the China-US trade war ceasefire gave way to questions about whether the two can ultimately resolve their differences.
However, oil prices continued to rise, building on Monday’s surge fuelled by the agreement as well as news of a Russia-Saudi Arabia pact to cap output, reports BSS.
Global investors were given some much-needed Christmas cheer at the weekend after Donald Trump and Xi Jinping called a halt to their painful tariffs battle for 90 days while they try to resolve their differences.
The news lit a fuse under markets after a torrid year that has been dominated by the trade war the world’s top two economies, which many fear will hit global growth.
However, there is concern that the three-month grace period will not be enough for them to hammer out agreements on key issues, particularly on intellectual property protection.
“Can the US and China really resolve their differences in 90 days?” asked Rodrigo Catril, senior strategist at National Australia Bank.
“It seems that more details and signs of progress will be needed if theinitial trade truce warm fuzzy feeling is to be sustained.”
Also, later Monday there was uncertainty about Trump’s claims in a tweet
that China had agreed to slash tariffs on car imports, with two of his top
advisers unable to provide clarity on the issue.
– Oil extends gains –
“That’s what happens when you don’t have the detailed negotiations going
into the summit” and end up with the “broad swath of a 35,000-foot deal,”
Bonnie Glaser, a China expert at the Center for Strategic and International
Studies in Washington, said.
“It’s risky. There’s certainly no guarantees that it will produce the
outcomes that we want.”
And Stephen Innes, head of Asia-Pacific trade at OANDA said there was
“complete confusion” over details of the Trump-Xi deal.