Asian equities surge on US/China hopes

Asian markets gain on US/China thaw

This morning, President Biden and Xi’s phone call has spurred hopes of a thaw in US/China relations. That is ostensibly good for trade everywhere and spurred a decent rally in stocks across Asia. That has sharply reversed the negative sentiment that dominated the US session, where a technical correction to an extended rally this week has been painted as tapering nerves.

Overnight, the S&P 500 fell by 0.46%, the Nasdaq eased by 0.25%, and the Dow Jones fell by 0.42%. US index futures have picked up a Biden/Xi shuffle themselves in Asia, though. Dow futures rising by 0.30%, S&P futures by 0.20%, and Nasdaq futures by 0.12%.

Needing no further cues, Japan’s Nikkei 225 has leapt 1.30 higher today, with South Korea’s Kospi rising by 0.30%. The Shanghai Composite is oddly muted in China, rising only 0.05% today, although the narrower Shanghai 50 had jumped by 0.72%. It is all systems go elsewhere, though, with the CSI 300 climbing 0.44% and the Hang Seng leaping 1.65% higher after Hong Kong list mainland tech giants endured a torrid day yesterday. Sentiment in Hong Kong may also be aided by Ever-Teflon, I mean Evergrande, pulling off another stay of execution.

Regionally, Singapore has risen by 0.65%, with Taipei 0.75% higher, although Kuala Lumpur and Bangkok have edged 0.20% lower. Jakarta and Manila are 0.10% and 0.45% higher. Australian markets also share the good cheer, the All Ordinaries rising by 0.25%, and the ASX 200 climbing by 0.45%. The rally is led by, you guessed it, resource companies and banks.

I expect European bourses to take a neutral ECB, and the potential olive branch of US/China relations to heart and open higher today, as should US markets, where some good news and Joe Biden in the same sentence have become a rare commodity of late.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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