Stocks and the yuan rose after President Joe Biden said the Trump administration’s tariffs on China were under review. The dollar and Treasuries retreated.
Energy and basic resource stocks led gains in Europe’s Stoxx 600 index, and US stock futures rose more than 1 percent after the S&P 500 fell for a seventh straight week.
Equities also rose in Asia and emerging markets.
Traders interpreted Biden’s comments that he would discuss US tariffs on Chinese imports with Treasury Secretary Janet Yellen when he returns from his Asia trip as a signal that some Trump-imposed measures could be reversed.
He also said the US military would step in to defend Taiwan from any attack by China and announced a dozen Indo-Pacific countries will join the US in a sweeping economic initiative aimed at expanding China’s hold in the region to counteract.
Treasury bonds fell as traders debated the Federal Reserve’s tightening stance amid growing concerns over an economic slowdown.
Base metals continued to recover from a five-month low as demand prospects were bolstered by a weaker dollar and China’s lending rate cut.
Bitcoin recovered from weakness over the weekend and traded around $30,000.
Equities have been volatile as investors assess the impact of China’s Covid policies on growth and the outlook for the world’s largest economies.
Beijing reported a record number of Covid cases, reviving concerns about a lockdown. China’s strict adherence to Covid Zero has stalled economic growth, prompting banks to cut a benchmark long-term lending rate by a record amount last week.
“It appears that while there is an initial attempt to ride some Wall Street dip-buying sentiment, a surge in virus cases in Beijing is limiting risk sentiment in the region, with China’s zero-Covid policy expected to remain in place for the foreseeable future,” said Jun Rong Yeap, market strategist at IG Asia.
Investors are battling worries of an economic slowdown and prospects of further monetary tightening.
The war in Ukraine is fueling commodity prices and supply chains remain disrupted by China’s adherence to its Covid-zero policy.
“As macro concerns linger on the back of aggressive monetary tightening, the Russia-Ukraine conflict and China’s strict Covid lockdowns, we expect significant market volatility,” said Louise Dudley, portfolio manager for global equities at Federated Hermes Ltd. , in a statement .
Minutes from the Fed’s latest rate-setting meeting will give markets a glimpse of the Fed’s tightening stance this week.
James Bullard, President of the St. Louis Fed, said the central bank should front an aggressive series of rate hikes to bring rates down to 3.5 percent by the end of the year, which if successful could depress inflation and lead to easing in 2023 or 2024 .
https://www.independent.ie/business/world/stocks-rise-after-biden-china-comments-dollar-drops-41677925.html Stocks rise after Biden China comments, dollar falls