Asia Markets

Asian shares bounce after Xi remarks on opening up

Key Points
  • Asian markets bounced on Tuesday after Chinese President Xi Jinping pledged to proceed with measures that will further open up China.
  • The measures mentioned by Xi included lowering import tariffs for autos and enforcing legal intellectual property of foreign firms.
  • U.S. stock index futures and the dollar firmed against the yen as investor confidence picked up.

Asian markets closed higher on Tuesday as stocks got a boost from Chinese President Xi Jinping's comments on measures planned to further open up the Chinese economy.

Those measures, which Xi brought up in his speech at the Boao Forum for Asia, included lowering import tariffs for autos and other products, as well as enforcing legal intellectual property of foreign firms.

Stocks in the region climbed and the dollar strengthened against the yen on the back of those remarks. U.S. stock futures also edged up amid improved investor confidence.

In Japan, the tacked on 0.54 percent, or 116.06 percent, to close at 21,794.32, off an intraday high of 21,933.99 hit earlier. The top performers for the day included the Topix iron and steel subindex and automobiles sectors, which rose 2.04 percent and 1.42 percent, respectively.

South Korea's Kospi index, meanwhile, erased earlier losses to close higher by 0.27 percent at 2,450.74 despite the move lower in major technology names.

Elsewhere, China markets were in positive territory. Hong Kong's bounced 1.82 percent by 3:00 p.m. HK/SIN after its tentative open in the morning. The materials sector outperformed the broader index, trading up 3.65 percent ahead of the market close.

On the mainland, the gained 1.67 percent to end at 3,190.65 and the Shenzhen composite rose 0.51 percent to finish at 1,841.22.

Down Under, the S&P/ASX 200 advanced 0.83 percent to 5,857, as the energy, materials and financials subindexes all recorded gains of more than 1 percent.

Dow Jones industrial average futures were higher by 283 points in Asia afternoon trade.

"The market is reacting positively to the speech and many points [Xi] highlighted in the speech were actually well anticipated by many of the domestic observers here in China," Hao Hong, chief strategist at Bank of Communications International, told CNBC's "Street Signs."

He pointed to better market access and the lifting of foreign ownership caps as examples of those measures.

Masayuki Kubota, chief strategist at Rakuten Securities in Japan, said the improvement in market sentiment was a result of Xi's speech, which reduced fears over the threat of a U.S.-China trade war.

Investors had been on edge over the possibility of a trade war happening in recent sessions, but the improvement in risk appetite saw the greenback gain against the safe haven Japanese currency.

Against the yen, the dollar firmed to trade at 107.15 by 2:48 p.m. HK/SIN, compared to levels around the 106.9 handle seen before Xi's speech.

Meanwhile, the Australian dollar, which tends to be sensitive to Chinese economic news, strengthened 0.47 percent to $0.7733.

The dollar index was mostly steady at 89.886.

Markets in the region had traded mixed ahead of Xi's speech, which had been anticipated amid heightened U.S.-China trade tensions in recent weeks.

Trade tit-for-tat

Xi's remarks on Tuesday came on the back of President Donald Trump's announcement on Friday that he had instructed U.S. trade officials to consider an additional $100 billion in tariffs on Chinese imports.

That followed China's Wednesday announcement that it would introduce extra tariffs on 106 U.S. products, including soybeans, although no start date was given.

Trump said in a tweet on Sunday that he expected China would remove its trade barriers, adding that the U.S. and China had a "[g]reat future" ahead. On Monday, however, the president criticized China in a separate tweet for what he called "STUPID TRADE."

U.S. stock indexes rose on Monday, but finished the day well off session highs following a report that FBI officers had raided the office of Michael Cohen, Trump's longtime personal lawyer.

Stocks stateside had rallied earlier in the overnight session after recent U.S.-China trade tensions appeared to ease following a week largely dominated by trade-related developments.

Disclosure: Larry Kudlow is a former CNBC contributor.

— CNBC's Huileng Tan contributed to this report.