Biden-Xi meeting adds to Asian markets’ rise
HONG KONG: Asian markets rose on Tuesday as investors brushed off a retreat on Wall Street and focused on signs of slowing inflation and China’s moves to shore up its economy.
A largely positive meeting between United States President Joe Biden and his Chinese counterpart Xi Jinping indicated an easing of tensions between the two superpowers and added to the upbeat mood on trading floors.
Still, there remains a lot of trepidation that central bank interest rate hikes aimed at taming inflation would eventually send economies into a recession.
And since last Thursday’s forecast-beating consumer prices data, Federal Reserve (Fed) officials have warned there were more increases in the pipeline, though they are not expected to be as big as the previous four increases of 75 basis points.
The latest was Vice Chairman Lael Brainard, who said that while it would probably be right to slow down the rate hikes, “we have additional work to do both on raising rates and sustaining restraint to bring inflation down.”
The comments, along with profit-taking, helped push Wall Street’s three main indexes into the red and pushed the dollar up against its peers, having tumbled last week.
Stephen Innes at SPI Asset Management said: “With US growth yet to fall off a cliff, make no mistake, inflation is still at the fulcrum of market expectations as board members continue to push back a bit on market pricing.”
However, Asian traders were little more upbeat, cheered by
China’s move to ease some of its strict coronavirus restrictions and provide much-needed support to its beleaguered property sector.
Hong Kong gained more than 4 percent and Shanghai also closed in the green.
Tokyo, Singapore, Seoul, Manila, Mumbai, Taipei, Jakarta, Bangkok and Wellington also jumped, but Sydney dipped.
Paris and Frankfurt rose at the open, though London was slightly down.
Optimism for a thawing in relations between Washington and Beijing was boosted after Biden and Xi’s extended talks on the sidelines of the Group of 20 summit in the Indonesian resort island of Bali.
While there remain differences on hot-potato issues such as Taiwan, the two did find common ground on Russia’s invasion of Ukraine, climate and the need to avoid another Cold War.
After the talks, Chinese Foreign Minister Wang Yi described it as a “new starting point,” saying Beijing hoped “to stop the tumbling of bilateral ties and to stabilize the relationship.”
After a painful year for markets across the planet, dealers are hopeful that there is finally light at the end of the proverbial tunnel.
“It’s certainly a time to be thinking about a recovery regime unfolding for markets,” said Kristina Hooper of Invesco.
“But it’s going to take a little time before we know if this really is something of a turning point for inflation and the Fed can be a lot more comfortable about hastening the end of tightening,” she told Bloomberg Radio.