Asian stocks and US equity-index futures saw gains, driven by anticipation of a US-China summit later this week for potential progress on trade and economic ties. MSCI’s Asia Pacific equities gauge advanced 0.2%, though Japan's market was closed for a public holiday. S&P 500 futures rose 0.3% after a modest gain on Friday, and Nasdaq 100 Index contracts climbed 0.4%. Hong Kong’s Hang Seng advanced 0.9%, and the Shanghai Composite index gained 1%. South Korea's Kospi rose 1.7%, with Samsung Electronics jumping 5% and SK Hynix climbing 0.6%, fueled by optimism surrounding artificial intelligence. Taiwan’s Taiex was up 1.1%, with TSMC adding 0.8%.
Oil prices continued their decline, with Brent crude dropping 0.3% to about $103.50 a barrel and West Texas Intermediate (WTI) falling 0.5% to $99.79 a barrel. The decline in oil prices was also attributed to increased vessel traffic and energy flows through the Strait of Hormuz, with a regional US commander stating that US naval protection and mine-clearance efforts are “paying off.” Despite this, oil supply concerns remain elevated, according to ING commodities strategists, due to ongoing tensions in Iran and attacks in Saudi Arabia.
US Treasury Secretary Scott Bessent met with Chinese Vice Premier He Lifeng in New York, describing the engagement as successful, particularly concerning trade and artificial intelligence. This meeting precedes the highly anticipated summit between US President Donald Trump and Chinese leader Xi Jinping. Analysts, such as those from Commonwealth Bank of Australia, believe the summit will likely aim to maintain the "fragile relationship stable." Investors are looking for a pro-business narrative and upbeat sound bites from the summit. The yen remained near 157 per dollar, while the Bloomberg Dollar Spot Index was largely unchanged.
Last week saw the Federal Reserve raise interest rates for the first time since 2023, and the Bank of Japan also increased borrowing costs in a split decision. The yield on the US 10-year Treasury was around 4.97% early Monday. With limited major economic data expected in the coming days, market attention is primarily focused on the upcoming US-China summit and its potential impact on global economic stability and trade relations.
