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.

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