-China trade war boosted global stocks to their highest in roughly three weeks on Monday, while triggering a dollar sell-off and pushing the Chinese yuan and several trade-dependent currencies higher.
Tokyo climbed one percent, Sydney rose 1.8 percent, Seoul put on 1.7 percent, Singapore was 2.4 percent higher and Taipei rallied 2.5 percent.
SYDNEY, Dec 3 (Reuters) - Asian shares rallied on Monday after USA and Chinese leaders brokered a truce in their trade conflict, a relief for the global economic outlook and a tonic for emerging markets. The deal should keep their trade war from escalating as they try to bridge differences with talks aimed at reaching a deal within 90 days. In return, Xi agreed to buy a "very substantial amount" of agricultural, energy and industrial products from the U.S.to reduce its large trade deficit with China, the White House said. This really has filtered through to other regional emerging markets and assets classes, including the South African Rand and Mexican Peso that is both more than 1% stronger on trade truce optimism. Regarding its effects on the market, futures contracts on the S&P 500 Index rose by as much as 1.9 percent within the first minutes of trading and have stayed relatively the same over the course of the trading day. The stock has risen nearly 20 per cent this year, and outperformed the Hang Seng Property Index by 5.9 percentage points in the past month.
Chinese blue-chip shares in Shenzhen and Shanghai were slightly weaker, and the benchmark Shanghai Composite index edged barely higher.
The risk-on mood saw MSCI's index of emerging-market currencies rise 0.7 per cent, led by China's yuan, which saw its biggest daily gain since February 2016.
Reichelt said that despite the headwinds for the dollar, without a resolution of a dispute between the European Union and Italy over the latter's budget plans, or euro-specific positive developments, euro/dollar would likely trade in a range of $1.12 to $1.16. The Russian rouble added 0.7 percent.
Sterling, meanwhile, dropped as Brexit nerves returned.
The offshore yuan gained about 1 percent, while the Aussie - viewed as a barometer of Chinese growth - was 0.7 percent higher against the greenback.
The Japanese yen slipped 0.2 percent to 113.59.
The dollar originally came under pressure last week on Powell's comments that rates were nearing neutral levels, which markets interpreted as signaling a slowdown in the Fed's rate-hike cycle.
Federal Reserve Chairman Jerome Powell was scheduled to testify on Wednesday to a congressional Joint Economic Committee, but the hearing was postponed because of a national day of mourning for US President George H.W. Bush, who died on Friday.
However, he said markets needed to see a further easing in trade tensions for the rally to continue.
Adding to market jitters was an inversion of the short end of the US yield curve in bond markets, which historically has signaled a USA recession. Ten-year yields traded around 3.03 per cent.
The Hang Seng Index ended up 0.29 per cent, or 78.40 points, to 27,260.44, while the Hang Seng China Enterprises Index gained 0.23 per cent, or 25.38 points, to 10,907.54.
Yields on riskier southern European bonds were down across the board, though Italian bonds trimmed some gains after the European Central Bank revealed Italy's share of ECB capital would be cut slightly. The two-year yield also fell, but by a narrower margin, touching 2.8028 per cent compared with a US close of 2.833 per cent.