Asia stocks seize upon US-China thaw, Japan's Nikkei 225 climbs ¥22,800

• Equities rallying on US-China goodwill reversal of sanctions.
• The recovery could prove short-lived if trade tensions continue to ramp up elsewhere between the US and China.

Asia equities are rallying early in the new week following a potential de-escalation of the US-China trade spat, and Japan's Nikkei 225 equity index is pushing into fresh three-month highs above 22,800.00.

Trump wants to reverse ZTE sanctions after talking with China's Xi - Financial Times

Stocks are rallying in Asia after US President Trump appeared to relax his stance against China on the weekend, vowing to get the Chinese company ZTE "back in business" after discussions with China's Xi Jinping. The softening of the stand-off between the US and China comes as a welcome relief to Asia equities, which have been marred as of late by the tit-for-tat exchange of tariff threats between the two countries. The relief rally sees Japan's Nikkei 225 up 0.25% on the day, with the Shanghai Composite sitting at +0.50% and the Taiwan TSEC up 0.85%, while Hong Kong's Hang Seng index has clambered up over 1.3% in Monday's trading.

 Nikkei 225 levels to watch

Japan's leading index has lifted strongly from March's low of 20,318.00, but the index is still down on the year, sitting at -5.7% from January's high of 24,186.00. The challenge for Nikkei bulls will be to keep the momentum going long enough to clear the next hurdle in resistance at the 23,000.00 major handle, a level that constrained prices last December. A bearish turnaround from here to could easily fall to 21,500.00 and hit the 50.0 Fibo retracement level, assuming support from the 200-day SMA at 21,700.00 fails to hold.