On Monday, Asian financial markets jumped that day. This increase came on the heels of U.S. President Donald Trump’s announcement to delay tariffs on multiple countries for at least 90 days, China notably among them. Experts are reading this strategic move as a victory for negotiation over confrontation. They think it will deal with the long-standing economic inequality in a serious way.
And in this regard, prominent investor Amala Balakrishner echoed this sentiment that negotiation is critical in trade-related dispute resolution. There are certainly better and worse ways of handling our big problems with unsustainable debt and imbalances, and President Trump’s decision to step back from a much worse way directly imposed by law and negotiate how to deal with these big, ugly imbalances is a tremendously better way. I hope and expect that he will do the same with the Chinese,” Balakrishner said.
As the news spread, gold prices reacted positively, climbing to $3,123.72 per ounce by 11:30 a.m. Singapore time. This increase in the price of precious metals is a strong reversal signal suggesting that investors flee to safety during unstable market conditions.
In Australia, mining stocks enjoyed strong gains as investors cheered the tariff freeze. The Australian market was just catching up to all the optimism on the broader Asian markets. Mining companies saw their fortunes blossom as they expected a quick resolution to trade tensions.
At the same time, China’s economic indicators didn’t look as good. PPI March 2016 Producer prices declined for the 29th month in a row, decreasing 2.5% from a year earlier. Analysts had expected an even steeper 2.3% fall, underscoring the continued headwinds buffeting the Chinese economy. Further underscoring deflationary pressures was the contraction of consumer prices in China for the second consecutive month.
A deepening of the producer price deflation in China added to the crisis. Consequently the onshore yuan depreciated, reaching its lowest value in nearly two decades. These events further fueled worries over China’s economic vulnerability as the country faces new challenges posed by an aging economy with decelerating growth momentum.
Indonesia’s Jakarta Composite rose by 4.88%, while the Philippines’ benchmark PSI climbed 2.05%. Singapore’s 30-stock Straits Times Index followed close behind, jumping by a very solid 5.87%, to 3,592.77 points. Such gains are a testament to the market’s bullish mood in the entire region.
West Texas Intermediate crude oil futures moved lower on the day, down 1.19% at $61.62 per barrel. The energy industry as a whole continued to respond warily to the shifting trade landscape and its possible effects on global demand.
In March, the consumer price index in the United States fell by 0.1% year-over-year. This ensures that the economy remains deeply in deflationary waters. This drop increases the Covid-19-related challenges to economic recovery as consumers are already experiencing heightened uncertainty.
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