On Tuesday, Asia Pacific shares closed higher as investors observe the reopening of economies as well as U.S.-China developments for this week.
Overall, the MSCI Asia ex-Japan index rose 0.63%.
Reserve Bank of Australia (RBA) maintains its current policy
Joseph Capurso, head of international economics at Commonwealth Bank of Australia, views the global health and financial crises “largely under control” in a note.
In addition, he adds that the high-frequency indicators claim that the global economy is recovering from recession regardless if a v-shaped recovery is possible or not.
Furthermore, RBA Governor Philip Lowe said in a statement that over the past month, the infection rates have decreased in most countries and there has been some easing of restrictions on economic lockdowns as he adds:
“If this continues, a recovery in the global economy will get under way, supported by both the large fiscal packages and the significant easing in monetary policies.”
The RBA also announced via Twitter that they would also include the current targets for its cash rate and 3-year government bonds.
At its meeting today, the Board decided to maintain the current policy settings, including the targets for the cash rate and the yield on 3-year Australian Government bonds of 25 basis points – https://t.co/xV1urr8dQt
— RBA (@RBAInfo) June 2, 2020
As a result, the S&P/ASX200 in Australia also closed positively, gaining 0.27% over in the Asia Pacific region.
China short on “phase-one” trade deal according to analysts
Amid the tensions going on between the U.S. and China, it seems that China is not doing its end of the bargain.
As per Reuters, China has told state-owned firms to restrict buying soybeans and pork from the U.S. after Washington reports that it would drop special treatment for Hong Kong to punish Beijing.
According to Bank of Singapore’s Eli Lee, he said that the purchase targets stipulated in the “phase-one” trade deal between the two economic superpowers were “a stretch in any case.”
He also tells CNBC that with the unexpected impact of the COVID-19 crisis, it may be impossible for China to hit targets in the trade deal.
Furthermore, he is not surprised that China would be withdrawing purchases, for they are likely to get as much leverage as they can before proceeding to a renegotiation.
As the Asia Pacific region tries to stabilize its markets, investors will try to further assess the situation between the U.S. and China for this week.
Featured image courtesy of Jack Moreh/StockVault