Asian Stocks Lifted by Hopes US Will Cut China Tariffs

 

Asian stock markets enjoyed a positive start to the week with sentiment boosted by news the US is reviewing some of its tariffs on Chinese goods, plus the easing Covid situation in the world’s No-2 economy.

The Hang Seng Index bounced back by an impressive 2.71%, or 571.77 points, to 21,653.90 with tech firms leading the charge, lifted by weekend reports from the US that inflationary pressures could force a rethink on Trump-era tariffs imposed on China. 

Hong Kong’s Tech Index rose 4.6%, with food-delivery giant Meituan up nearly 10% as its quarterly revenue surpassed analysts’ estimates.

 

Also on AF: China Services Activity Shrinks for Third Month in May

 

The tariffs news, along with Beijing and Shanghai returning to normal life after weeks of Covid lockdowns, also encouraged traders on the mainland where the Shanghai Composite Index was up 1.28%, or 40.91 points, to 3,236.37 to close at a two-month high.

The country’s blue-chip CSI300 index also rose 1.9% to 4,166.09, its highest level in seven weeks, helped by more measures by Beijing to revive economic growth.

The tech-focused STAR Market added 3.9%, extending gains from a 4.7% jump in the previous session, amid speculation that the market will lower its investor threshold.

New energy shares soared 5.2%, with new energy vehicles surging 5.6% and photovoltaic firms up 4.6%.

This followed news that President Biden will declare a 24-month tariff exemption for solar panels from four Southeast Asian nations after an investigation froze imports and stalled projects in the United States.

In Tokyo, the benchmark Nikkei 225 index rose 0.56%, or 154.32 points to end at 27,915.89. The broader Topix index advanced 0.31%, or 5.97 points, to 1,939.11.

Indian stocks fell back with Mumbai’s signature Nifty 50 index down 0.09%, or 14.75 points, to close at 16,569.55. Malaysian and South Korean markets were closed for public holidays.

 

Dollar, Crude Oil Firm

Globally, stocks, the dollar and crude oil firmed as investors positioned themselves for more direction on interest rates and the economy from a string of central bank meetings spilling into next week.

The European Central Bank meets on Thursday, though it is not expected to begin raising interest rates until July, with rate setters at the US Federal Reserve and Bank of England gathering next week.

“There is still some doubt as to whether or not inflation has peaked,” Michael Hewson, chief markets analyst at CMC Markets, said.

“We are in a bit in a no-man’s land at the moment with respect to peak inflation, and also China reopening and the possible tailwinds that might bring. Oil prices are still a headwind and so it’s difficult to gain any direction.”

The week kicked off with some investor appetite for risk as the MSCI all country stock index gained 0.3%, its recent rebound from near bear-market territory still largely intact.

Oil prices firmed after Saudi Arabia raised prices sharply for its crude sales in July, an indicator of how tight supply is even after OPEC+ agreed to accelerate output increases over the next two months. Brent was up 0.6% at $120.41 a barrel. US crude rose 0.55% to $119.53 per barrel.

S&P 500 futures added 1% and Nasdaq futures 1.4%, pointing to a higher open on Wall Street.

 

US Consumer Prices Report

Markets will be on tenterhooks for the US consumer prices report on Friday, especially after EU inflation shocked many with a record high last week.

Forecasts are for a steep rise of 0.7% in May, though the annual pace is seen holding at 8.3%, while core inflation is seen slowing a little to 5.9%.

A high number would only add to expectations of aggressive tightening by the Fed, with markets already priced in for half-point increases in June and July and almost 200 basis points by the end of the year.

In commodity markets, wheat futures jumped 4% after Russia struck Ukraine’s capital, Kyiv, with missiles, dampening hopes for progress in peace talks.

 

Key figures

Tokyo – Nikkei 225 > UP 0.56% at 27,915.89 (close)

Hong Kong – Hang Seng Index > UP 2.71% at 21,653.90 (close)

Shanghai – Composite > UP 1.28% at 3,236.37 (close)

New York – Dow > UP 1.3% at 33,248.28 (Friday close)

 

  • Reuters with additional editing by Sean O’Meara

 

Read more:

US May Lift Some China Tariffs to Battle Surging Inflation

Biden to Lift Tariffs for Two Years on ASEAN Solar Panels

 

Sean O’Meara

Sean O’Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.