SYDNEY (Reuters) – Asian equities rallied close to one-month highs on Monday, while the US and China softened their trade war rhetoric as the dollar fell again as investors bet on a slower rate hike in the US.
MSCI's largest index for Asia-Pacific equities outside Japan .MIAPJ0000PUS gained 0.07 percent for a third straight day of wins and a one-month strike distance.
The Japanese Nikkei .N225 was trading at 0.1 percent, while the South Korean KOSPI index .KS11 climbed 0.3 percent.
Investor sentiment was strengthened after US President Donald Trump promised Chinese telecom company ZTE Corp ( 000063.SZ ) "to get back to business quickly," according to JPMorgan analysts. was "a significant positive. "
ZTE suspended its key operations earlier this month after a US ban that bans American companies to deliver it after it was determined that the Chinese company has violated US export restrictions illegally shipping US goods to Iran.
But Trump held a helping hand on Sunday when he tweeted that he and Chinese President Xi Jinping were working together on a solution for ZTE.
Regardless, US officials are preparing for talks with Chinese Trade Minister Liu He in Washington to settle an escalating trade dispute.
"The fact that Trump is now … working to find a solution for ZTE marks the recent signs of thaw in relations between Beijing and Washington," JPMorgan said in one note.
"This indicates that Trump sees the opportunity for real progress in the trade talks and the position de weakens the US in a key issue for China, "he added.
"Trump also needs China to stay on the side ahead of his meeting with North Korea's Kim, and this suggests that the signals from the US for trading will be more positive until June 12th."
North Korea leader Kim Jong Un plans to dismantle the country's nuclear bomb test site next week for his meeting on June 12 with Trump in Singapore.
The US has said it will lift sanctions on Pyongyang if North Korea agrees to completely dismantle its nuclear weapons program.
The strong corporate earnings in the current reporting season and the expectation that the US Federal Reserve will raise interest rates more slowly have also supported market sentiment in recent sessions.
On Wall Street, the Dow .DJI ended Friday 0.4 percent. The S & P 500 added 0.2 percent, while the Nasdaq .IXIC was barely changed.
In Asia, investors will also be watching Malaysia's financial markets open after a two-day holiday following Mahathir Mohamad's overwhelming victory in last week's parliamentary elections.
"We will watch the market and take the necessary action no matter how the market develops," Mahathir said Saturday, after offshore investors expressed concern that their populist promises could undermine economic prospects.
The Malaysian ringgit MYR = dropped to a 4-month low of $ 3,982 per dollar in early trades. The stock market opens at 01:00 GMT.
OIL AND IRAN
Last week, the Bank of England kept interest rates steady, and the New Zealand Central Bank said the official rate will remain at historic lows of 1.75 percent "for some time".
This leaves the Fed as the only major central bank in the world that advocates rate hikes, although recent data showing moderate inflation rates raise doubts about the pace of interest rate hikes.
The dollar .XXY was a little softer at 92.48 against a basket of major currencies and set its fourth loss day in a row.
Compared to the Japanese Yen JPY = fell to 109.33 per dollar and remained largely in a holding pattern since last month.
The euro-EUR exchange rate rose 0.1 percent to $ 1.1953 after two consecutive sweepstakes as Italy's anti-establishment parties were likely to form the next government.
While tensions on the Korean peninsula have eased, US plans to reintroduce sanctions against Iran have fueled concerns in the Middle East.
Iran is pumping about 4 percent of world oil, and recent development has brought oil prices close to multi-year highs.
On Monday, US crude oil price CLcv1 was $ 70.7 a barrel and Brent LCOcv1 was 3 cents at $ 77.08.
The United States threatened to sanction European companies doing business with Iran on Sunday as the remaining participants in the Iranian nuclear deal stiffened their resolve to keep this agreement going.
Spot Gold XAU = rose 0.2 percent to $ 1,320.06 an ounce after making a small weekly profit last week.
Section of Shri Navaratnam