Asian Stock Market: Mildly positive as Xi-Biden talks mark positive start

• Asian equities grind higher as Treasury yields retreat from multi-day peak.
• Biden-Xi talks start with optimism towards rebuilding relations, Biden signs $1.0 trillion stimulus bill into law.
• RBA Minutes, Governor Lowe rejects rate hike calls.
• Eurozone GDP, US Retail Sales become the key catalysts to watch.

Asia-Pacific shares trade slightly higher during early Tuesday, following a sluggish start to the week amid hopes of US-China ties and further stimulus. However, cautious sentiment ahead of the US Retail Sales data release probes the bulls.

Against this backdrop, MSCI’s index of Asia-Pacific shares outside Japan gains 0.40% whereas Japan’s Nikkei 225 prints mid gains ahead of the European session.

A positive start to the virtual talks between US President Joe Biden and his Chinese counterpart Xi Jinping seems to have underpinned the latest positive mood in the market. US President Biden said that US-China relation is profoundly important to the world. On the same line, China’s Xi mentioned, “Stands ready to move US-China relations forward in a positive direction”.

It’s worth noting that hopes of further stimulus from China and the US add to the risk-on mood. That said, US President Biden signed a $1.0 trillion infrastructures stimulus bill into the law, increasing the odds of a broad aid package to arrive soon.

Amid these plays, property stocks in China led the run-up, which in turn favored markets in Hong Kong, Indonesia and South Korea. However, Australia’s ASX 200 and New Zealand’s NZX 50 bucks the trend as regional unlocks are firmer data challenges easy money policies even as the Reserve Bank of Australia’s (RBA) policymakers reject rate hikes. Investors in India also fear a reduction in the easy money policies amid the lowest covid daily infections since February.

On a broader front, the US stock futures print mild gains whereas the Treasury yields retreat from a three-week high. It’s worth noting that the Richmond Federal Reserve Bank President Thomas Barkin cited the need for a “wait and see” approach to tame the inflation whereas President of the Federal Reserve Bank of Minneapolis Neel Kashkari said that the FOMC shouldn’t overreact to temporary factors.

Moving on, fresh updates over the Biden-Xi talks and the US Retail Sales for October, expected to reprint the 0.7% MoM growth, will be important to watch for fresh impulse.

Read: US Retail Sales Preview: Win-win for the dollar? Three scenarios, only one dollar-negative