Asia-Pacific stocks rose Tuesday after Chinese President Xi Jinping pledged to significantly broaden market access this year.
Xi’s conciliatory message at the Boao Forum eased fears of a damaging trade war between the U.S. and China, fueling stock gains in the region as market players overcame earlier anxiety about a late U.S. selloff. S&P 500 futures also rallied sharply after the comments.
“It is music to investors’s ears,” said Rodrigo Catril, a currency strategist at National Australia Bank.
The Nikkei Stock Average NIK, +0.54% rose 0.5% as the yen reversed a two-day rally, helping lift stocks of exporters. The U.S. dollar USDJPY, +0.24% was recently 0.3% stronger against the Japanese currency.
In Hong Kong, the Hang Seng Index HSI, +1.65% rallied 1.7%, while the Shanghai SHCOMP, +1.66% gained 1.6%.
South Korea’s Kospi SEU, +0.27% rose 0.3%, reversing losses of as much as 1%, as KB Financial Group 105560, +3.53% jumped 3.5% and steelmaker Posco 005490, +3.67% climbed 3.6%.
Australia’s S&P/ASX 200 XJO, +0.83% was up 0.8%, while New Zealand’s NZX 50 NZ50GR, +0.18% was 0.2% higher.
Speaking at the Boao Forum, known as Asia’s Davos, Xi promised foreign companies greater access to China’s financial and manufacturing sectors and pledged Beijing’s commitment to further economic liberalization.
An upswing in markets following the comments suggested they had helped defuse anxieties that a recent U.S.-China tit-for-tat over trade could escalate into a trade war.
The remarks also lifted early caution in markets following sharp late-session declines in the U.S. triggered by news that federal investigators searched the office, home and hotel room of President Donald Trump’s personal lawyer. The selling pared gains for the Dow Jones Industrial Average DJIA, +0.19% to 0.2%.
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Meanwhile, the U.S. dollar USDCNY, -0.3283% declined 0.3% against the offshore yuan as market participants scaled back expectations that Beijing might use the yuan’s value as a weapon in a trade war against the U.S.
Such a decision would have risks that would also set back efforts to internationalize China’s currency, analysts said.
“A devaluation would be a major step backwards and I doubt it can be seriously considered as it goes against all previous rhetoric,” said Brendan Ahern, chief investment officer at KraneShares.