Stocks Climbed on Biden’s Tariff Comments on China

Asian stocks mixed after President Joe Biden said China tariffs imposed by the Trump administration were under consideration.

Shares in Mainland China and Hong Kong dipped while Japan, South Korea and Thailand inched up.

US equity futures rose amid expectations bargain hunters will help pull the S&P 500 back from bear-market levels. Energy and basic resources led gains in Europe’s Stoxx 600 Index, while Asian and emerging markets shares climbed.

The euro rose to its highest level in four weeks and most of the region’s bonds fell after European Central Bank President Christine Lagarde said the ECB is likely to start raising interest rates in July and exit sub-zero territory by the end of September. Treasuries dropped as investors debate the Federal Reserve’s tightening path amid mounting worries about an economic slowdown.

Traders interpreted Biden’s comments that he’ll discuss the US tariffs on Chinese imports with Treasury Secretary Janet Yellen when he returns from his Asia trip as a signal there could be a reversal of some Trump-imposed measures.

“Today’s appetite for risk has been sparked by the US President’s announcement that trade tariffs imposed on China by the previous Trump administration will be discussed,” said Pierre Veyret, a technical analyst at ActivTrades.

“Investors see this as a possible de-escalation of the trade war between the two economic superpowers, and this has revived trading optimism towards riskier assets.”

Separately, Biden said the US military would intervene to defend Taiwan in any attack from China, comments that appeared to break from the longstanding US policy of “strategic ambiguity” before they were walked back by White House officials. Meanwhile, his administration announced that a dozen Indo-Pacific countries will join the US in a sweeping economic initiative designed to counter China’s influence in the region.

“As macro-economic concerns stemming from aggressive monetary tightening, the Russia-Ukraine conflict and China’s stringent Covid lockdowns persist, we anticipate great volatility in the market,” Louise Dudley, portfolio manager global equities at Federated Hermes Ltd., said in a note.

Crude oil inched up with WTI trading round $111 and Brent trading around $113 a barrel.