Most Southeast Asian stocks ended higher on Tuesday after fears about trade war escalation were calmed as Beijing said a Chinese delegation was preparing to travel to Washington for talks. Beijing confirmed that its top negotiator, Vice Premier Liu He, would go to the United States on Thursday and Friday as planned, bringing some relief to the markets after additional tariffs on Chinese imports called on by US President Donald Trump shocked financial markets.
The swift deterioration in negotiations between the world's two largest economies hit global financial markets as investors faced the prospect of an escalation rather than an end to a 10-month-old trade war. Singapore stocks, which are most exposed to global trade, rebounded from previous session's slump to close 0.7 percent higher on Tuesday.
Malaysian shares ended higher after the country's central bank - Bank Negara Malaysia (BNM) - cut its overnight policy rate (OPR) by 25 basis points to 3.00 percent, its first since 2016, thus becoming a front runner in Southeast Asia to cut rates this year. "The rate cut was widely expected ... so even with the rate cut, the sentiment is still fragile (following Monday's sell-off)," said Chan Ken Yew, head of research at Kuala Lumpur-based Kenanga Investment Bank.
Some analysts are expecting the central bank to stay pat on its benchmark rate for the rest of 2019. Telecommunication service providers Axiata Group and Digi.com were among the best performers on the benchmark index. The Philippine and Indonesian indexes closed up about 0.6 percent each, boosted by telecommunication stocks.
Philippine's central bank is widely expected to cut the Overnight Reverse Repurchase Rate (RRP) by 25 bps at its monetary policy meeting on May 9, as the nation also faces benign inflation. A similar move is expected for Indonesia, after data on Monday showed that the country's economy expanded more slowly than expected in the first quarter, as investment dropped. Bucking the trend, Thai stocks ended 0.6 percent lower, dented by declines in energy shares.