Asian Stocks Bounce Back After Rocky Open as Trump Predicts Outcome of U.S.-China Trade Dispute

Global equity markets fluctuated at the start of trading Monday before turning higher later in the morning, as lingering concerns over U.S.-China trade relations continued to influence investor sentiment.

Markets Pull Ahead

Asian stocks overcame a rocky start to trade firmly higher by midday. Japan’s Nikkei 225 Index gained 0.6%. The Topix Index in Tokyo also added 0.4%.

Mainland China’s Shanghai Shenzhen CSI 300 Index climbed 0.3%. Hong Kong’s Hang Seng Index led the rally, climbing 1.8%.

U.S. stock futures were also higher, pointing to a strong start to the day on Wall Street.  The Dow Jones mini futures contract gained 176 points, while futures on the S&P 500 added 18.75 points. Meanwhile, the Nasdaq 100 mini gained 59 points. Each index plunged more than 2% on Friday.

The April expiry on the VIX futures contract was down nearly 3% overnight. The CBOE VIX volatility gauge closed at 21.49 on Friday, having gained 13.5% on the day.

Trump’s Prediction

President Donald Trump predicted Sunday that China would be the first to flinch in the ongoing trade dispute.

“China will take down its Trade Barriers because it is the right thing to do,” the president tweeted. “Taxes will become reciprocal & a deal will be made on Intellectual Property.”

The Trump administration doubled down on its pledge to tax Chinese imports after Beijing announced plans for reciprocal tariffs targeting U.S. goods. Trump indicated last week he is prepared to slap China with an additional $100 billion in tariffs, which would bring the total to $150 billion. That’s more than China imports from the U.S. each year.

Senior members of the Trump administration, including Larry Kudlow, defended the president’s threats to impose additional tariffs on Chinese imports. In their view, this is part of a broader strategy to secure long-term growth. Kudlow, who serves as Trump’s top economic adviser, told CNN on Sunday that tensions could be averted if China agrees to drop its predatory trade practices.

What to Look for This Week

Investors are bracing for an active week in finance, with corporate earnings, economic data and several speeches from high-profile decision-makers set to make headlines.

On Monday, Bank of Japan Governor Haruhiko Kuroda will kickoff his second term with a speech in Tokyo. Kuroda’s second term begins with Japan’s economic recovery shifting into high gear.

China’s President Xi Jinping will deliver a keynote speech at an annual conference in Asia on Tuesday.

Facebook CEO Mark Zuckerberg will testify before Congress on Tuesday and Wednesday in relation to the Cambridge Analytica scandal.

On the economic calendar, U.S. inflation figures and Chinese trade data are due throughout the week. The minutes of last month’s Federal Open Market Committee (FOMC) meeting are scheduled for release on Wednesday.

U.S. banks JPMorgan Chase & Co and Citigroup will report first-quarter earnings on Friday.

Featured image courtesy of Shutterstock. 

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi