France has been loudest in insisting Brussels must show it is willing to deploy its trade weapon, known as the anti-coercion instrument – allowing officials to take measures such as import and export restrictions on goods and services.
Neil Wilson at Saxo Markets warned that would end up “effectively killing trade between the two … the nuclear option is on the table it seems, but for the moment expectation seems to be veering towards a deal”.
After another record day for the S&P 500 and Nasdaq on Wall Street, Asia picked up the baton and ran.
Tokyo piled on 2 per cent, having jumped more than three percent Wednesday on the trade deal, while Hong Kong continued its standout year with another advance.
Shanghai, Seoul, Singapore, Wellington, Taipei and Manila also rose.
Traders are also keeping an eye on developments in Tokyo after Japanese Prime Minister Shigeru Ishiba denied discussing his resignation with party elders on Wednesday, as speculation about his future intensified following a weekend election debacle.
Despite the saga, the yen extended its gains, briefly hitting 145.86 per dollar as the trade deal allows investors to turn their attention to the Bank of Japan’s policy meeting next week hoping for guidance on its next interest rate hike.
The unit had been sitting around 147.90 before the deal.
Bank officials have held off rocking the boat on the issue amid tariff uncertainty, but observers say the agreement can allow them to reconsider lifting in October.
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