Asian Stocks on Highs as China Modifies Policy

Asian stocks rose on Tuesday. The Chinese shares led to the surge in Asian stocks. It was after Beijing adjusted financial policies to heighten local government spending on public works. Also, the decision of the U.S. to avert import tariffs on Mexico helped to boost these stocks and gave relief to investors.

Aside from that, the support increased on the possible U.S. interest cut to as early as next week.

Meanwhile, in the stocks of early European trade, the pan-region Euro Stoxx 50 futures boosted 0.06%. German DAX futures rose 0.4% as well. Also, FTSE futures were up 0.14%.

On the other hand, the MSCI’s broadest index of Asia-Pacific shares across Japan added 0.8%.

On Monday, China allowed local governments to use profits from special bonds as capital for major investment projects in a bid to help the weakening economy. And after that, the Shanghai Composite Index gained 2%.

Similarly, the Australian stocks climbed 1.5%. The KOSPI in South Korea rose by 0.55%. And Japan’s Nikkei added 0.3%.

The Trade War of the U.S.

On the other hand, after the United States held off from its immediate imposition of tariffs on Mexico investors and buyers started to cheer. However, U.S. Secretary of State Mike Pompeo stated that the U.S. can still slam tariffs on Mexico if there will be no development on its responsibility to stem illegal immigration. 

Moreover, global markets are in the state of some reprieve, while the new U.S. threats against China might restraint any boost to investor sentiment.

Aside from that, U.S. President Trump expects to talk with the Chinese President at the summit in Osaka, Japan on June 28 and 29. But China did not confirm if the meeting will happen. This raises some questions regarding the future of Asian stocks.

Senior Strategist Masahiro Ichikawa stated, “The lift from the U.S.-Mexico trade development is likely to be a temporary one for the equity markets, as the bigger issue between the United States and China remains unresolved.”

Looking back, the trade tension between the U.S. and China elevated in May. It began when the Trump administration accused China of breaking its promises to make structural economic changes during months of trade talks.