Market Close Feb 11

Xi-Biden call lifts investor mood

Copper hits an 8-year high amid low stocks, renewables demand; Fed pledge to asset purchases keeps risk appetite strong; Gold, US Treasuries shunned  

Xi-Biden call lifts investor mood
Xi Jinping and Joe Biden got to know each other eight years ago when they were vice-presidents. The two men spoke by phone on Thursday (Asian time) in far different circumstances. But investors were encouraged by the US President's call, feeling it should calm the waters after a year of bilateral strain when Donald Trump was US leader. File photo: AFP.

(ATF) Hong Kong: Asian markets clung to their recent gains as risk appetite remained strong on easing US-China tensions and following dovish comments by the Federal Reserve chairman.

But trading volumes were light as China, Japan, South Korea and Taiwan were all on holiday.

Hopes of improving relations between the world’s two biggest economies were triggered after a phone call between their leaders.

In the call, President Joe Biden  pledged to pursue “practical, results-oriented engagements when it advances the interests of the American people and those of our allies” but also spoke about China’s coercive and unfair economic practices, according to a White House statement.

Xinhua reported that Chinese President Xi Jinping said it is important to manage differences where they exist and jointly pursue cooperation where it is desirable to do so.

Analysts drew positive conclusions from the brief conversation, the first between the two since the election of the US President.

“We take the call between President Xi and President Biden as a confirmation signal that the relations between the two countries will improve,” Zhiwei Zhang, Chief Economist at Pinpoint Asset, said.

'Boost for HK sentiment'

“This call is positive for the Hong Kong equity market in particular. HK market has been the battleground between the two countries in the past two years, as its valuation lagged other markets. Improving bilateral relations will help to boost sentiment in HK.”

Earlier, Federal Reserve chair Jerome Powell, in a speech to the Economic Club of New York, said the US central bank would continue its asset purchase programme and called for called for a “society-wide commitment” to reducing unemployment, seen as an endorsement of President Joe Biden's $1.9-trillion stimulus package.

Copper prices hovered around eight-year highs struck amid growing signs of an economic recovery and rising applications in more sustainable sectors, such as electric vehicles, solar panels and wind farms.

The three-month copper contract on the London Metal Exchange CMCU3 dipped 0.1% to $8,289 a tonne, just off its highest level since the February 2013 peak of $8,327.50 a tonne.

“Falling inventories particularly in China, is a main contributing factor to the continuing rally in copper prices on the back of a surge this week, taking it to levels not seen since early 2013,” analysts at BCA Research said.

“Demand pressure is building, as Covid-19 vaccination rates rise. Funding for renewable energy capacity installation is rising, and now includes expected US fiscal stimulus focused on renewables. Recovering global GDP, and China’s metals-intensive Five-Year Plan also will contribute to demand growth.”

The risk on environment weighed on demand for safe havens with US 10-year yields rising 2 basis points to 1.14% and gold prices edging lower.

 

Also on Asia Times Financial

Asia Stocks

· Australia’s S&P ASX 200 eased 0.1% 

· Hong Kong’s Hang Seng index climbed 0.45%

· The MSCI Asia Pacific index was flat

Stock of the day

Medical services provider Ping An Healthcare and Technology rose as much as 27.7% and was among the heaviest traded stocks on the HK after a report that exchange traded fund ARKF had purchased 497,800 shares of its shares.

Asia markets Copper US Fed Biden Xi Jinping Jerome Powell Hong Kong Uighurs