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Trump-Xi meeting, remarks Fed Powell, the dollar in the center of the debates



Asian markets rose on Thursday morning in anticipation of a crucial meeting between President Donald Trump and Chinese leader Xi Jinping, who many hope will help ease the trade tensions between the United States and China.

Greater China's markets also advanced: the Shanghai Composite gained 0.49% in early trade, while the Shenzhen Composite gained 0.56%. The Hang Seng Hong Kong index gained 0.59%.

In Australia, the ASX 200 gained 0.57%, with gains in most sectors. The energy sub-index rose 0.5%, materials 1.14% and the financial sector, heavily weighted 0.76%.

The session in Asia follows a major rally on Wall Street, where the Dow Jones Industrial Average jumped more than 600 points.

The reactions of the US stock market were motivated by the words of the Chairman of the Federal Reserve, Jerome Powell. He said Wednesday that he considered the benchmark interest rate of the central bank was close to a neutral level, an important distinction from the remarks that he made there. less than two months old.

"Considering that there has been no rise in interest rates since September, these comments teach us one of two things, namely that the Fed finally figured out where the neutral rate was or felt that a pause in the tightening had become necessary, "Kathy Lien, managing director of BK Asset Management's foreign exchange strategy, wrote Wednesday in an evening note.

"It is very likely this is the last case, as economic data has weakened, stocks have fallen and low oil and gas prices are limiting rather than favoring inflation," he said. she said.

Powell's comments pushed the US dollar lower against a basket of peers, with the dollar index trading at 96,838 on Thursday morning, down from levels above 97,200 overnight. .

Lien also pointed out that it was important to realize that if Powell's words "could change the game" for the dollar, the external factors that drive down other currencies have not changed.

Nevertheless, concerns and uncertainties remain, according to other market observers.

"The market sentiment was a bit more positive before Powell's speech, but the commercial uncertainty continues to weigh," wrote Jack Chambers of ANZ Research in a morning note. "Investors will look for progress at the Trump-Xi meeting this weekend, after the announcement that President Trump is hocking his rates."

White House economic adviser Larry Kudlow said earlier this week that the Trump administration had resumed talks with the Chinese government "at all levels" in anticipation of the high-stakes meeting between the two presidents at the G20 summit in Argentina.

During the meeting, Trump should focus on issues such as alleged intellectual property theft by China, ownership of US companies in China, and tariff and non-tariff barriers.

In the broad currency market, the yen traded at 113.51 to the dollar while the Australian dollar was around 0.7298 dollars, rising from less than 0.7250 dollars.


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