Asia stocks rise on US–Russia peace hopes

August 11, 2024 (MLN): Asia stocks advanced Monday as optimism over potential progress in US–Russia peace talks buoyed global sentiment, lifting equity-index futures for the US and Europe while weighing on oil and gold prices.

Contracts for European shares and the S&P 500 Index climbed 0.2%, while oil fell 0.6% and gold also dropped as US President Donald Trump prepared to meet Russian counterpart Vladimir Putin on Friday.

Asian shares rose 0.3% and a gauge of the dollar weakened 0.2%.

Bitcoin surged as much as 3.2% to top $122,000, nearing a record high, as Bloomberg reported.

There was no cash trading in Treasuries in Asia due to a holiday in Japan.

Asian lithium stocks rose while most chip shares retreated.

“The initial reaction from commodity markets, with both gold and oil prices sliding underscores investors’ bullish bias for a breakthrough in this week’s US–Russia talks,” said Hebe Chen, an analyst at Vantage Markets in Sydney.

“If such a deal is struck, it would not only sustain market optimism, but also mark this week as a historic turning point.”

Financial markets drew comfort from the prospect of ending the three-year war in Ukraine after a weekend of intense diplomacy.

European nations are seeking talks with Trump ahead of his meeting in Alaska.

Trump had earlier threatened sanctions on countries, including India, for purchasing oil from Russia, prompting Putin to hold calls with Indian Prime Minister Narendra Modi and other leaders.

National security advisers from Europe, Ukraine, and the US met in the UK, making progress toward ending the fighting.

The talks followed a call between Ukraine President Volodymyr Zelenskiy and UK Prime Minister Keir Starmer, alongside other diplomatic engagements.

Brent traded near $66 a barrel after sliding 4.4% last week, while West Texas Intermediate hovered above $63.

A peace deal could lift sanctions on Russian supply, potentially deepening an expected oil glut later this year.

“If there’s a positive resolution, I think market sentiment will improve,” said John Woods, Asia CIO at Lombard Odier.

“If there’s an outbreak of peace in Europe, then the risk premium attached to oil is likely to be repriced or de-rated.”

In cryptocurrencies, Bitcoin climbed toward an all-time high on institutional and corporate demand.

Ether rallied above $4,300, its highest since December 2021.

Lithium prices and stocks spiked after Contemporary Amperex Technology Co. Ltd. halted operations at a major Chinese mine.

Asia’s chip sector declined after Nvidia Corp. and Advanced Micro Devices Inc. agreed to pay 15% of their China-related chip sales revenues to the US government under a deal with the Trump administration to secure export licenses.

Investors this week are watching for US inflation data and a possible extension of the Aug. 12 deadline for US tariffs on Chinese exports.

Ahead of the deadline, Trump urged China to increase US soybean purchases, lifting soybean futures in Chicago.

Markets Live Strategist Garfield Reynolds noted that Chinese equities were already responding positively to reports of the Nvidia–AMD deal, and Trump’s soybean comments may add momentum.

Separately, Goldman Sachs analysts said US firms have largely absorbed Trump’s tariffs so far, but the costs are increasingly shifting to consumers.

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