HONG KONG (Nikkei Markets) -- Hong Kong shares jumped the most in two months on Friday on reports that U.S. President Donald Trump had approved a phase one trade deal with China, 18 months after the two countries began their trade war.
Positive sentiment toward risk assets also intensified on the prospect of a decisive victory for Prime Minister Boris Johnson in elections, paving the way for the U.K. to leave the European Union next month.
Trump has signed a limited trade deal with Beijing that involves rolling back some existing tariffs on Chinese goods and averting plans to impose new levies, Bloomberg reported, citing people familiar with the matter. The Wall Street Journal cited people familiar with the matter as saying that Trump had agreed to a deal with China. Under the terms, China reportedly agreed to buy more U.S. agricultural goods next year.
Meanwhile, exit polls pointed to a convincing victory for U.K. Prime Minister Boris Johnson in general elections, an outcome that should help its long-planned exit from the European Union.
"The market is getting two Christmas presents early," Tai Hui, Asia chief market strategist at J.P. Morgan Asset Management, wrote in a report on Friday. The news provides a "positive short-term boost to market sentiment as we run towards the end of 2019."
The Hang Seng Index climbed 2.1% to 27,551.46 by noon, heading for its highest close since Nov. 8. Forty-nine of the gauge's 50 constituents traded higher by the midday break. Pan-Asia insurer AIA Group advanced 3%, while internet services company Tencent Holdings rose 2.5%.
All three major U.S. equity indexes ended at record highs overnight, and futures pointed to a stronger opening on Wall Street on Friday after Trump on Thursday said on Twitter that the U.S. was getting "very close to a big deal with China."
The safe-haven Japanese yen fell 0.3% against the dollar, while spot gold prices slipped 0.1%. The Nikkei Asia300 jumped 2%.
Some market participants struck a cautious tone.
"We are waiting to see if the deal will roll back previous tariffs in addition to halting the Dec. 15 hike," said Tracy Chan, an analyst at KGI Asia. "The deal falling apart over the weekend remains a possibility."
In the mainland, the Shanghai Composite Index jumped 1.2%, while the yuan traded onshore rose 0.2% against the dollar to 6.9684.
In Hong Kong, casino operators Sands China and Galaxy Entertainment Group rose 5.2% and 5.4%, respectively. Chinese President Xi Jinping is scheduled to visit Macao next week to announce new policies aimed at diversifying the city's gaming-dependent economy into a financial center, Reuters reported, citing interviews with officials and corporate executives.
China Life Insurance added 2.4% after reporting a 5.7% increase in premium income for the January-to-November period.
China Pacific Insurance (Group) rose 2.7% following a 5.6% increase in gross premium income for the January-to-November period. New China Life Insurance, which reported a 12.1% increase in gross premium income for the 11-month period, added 3.4%.
Pork producer WH Group advanced 1.6%. Its unit Smithfield Foods wants to export around 40,000 metric tons of chilled pork to Hong Kong amid a supply squeeze that has boosted prices in the former British colony, a company executive at Smithfield said on Thursday.
London-headquartered lender Standard Chartered rose 3.6%. The bank and Indonesian conglomerate PT Astra International have entered an agreement to dispose of their respective 44.56% stakes in PT Bank Permata to Bangkok Bank for a total of $2.6 billion. Upon completion, Standard Chartered expects to report a gain of $500 million.
-- Benny Kung