‘Had He Acted Like Trump Markets Would Have Been Upset’: Xi Tries To Put Out Trump’s Dumpster Fire

If Donald Trump is the guy you don’t want opening his mouth if what you’re trying to do is find some shelter from the geopolitical storm or otherwise seek respite from the myriad reasons to be cautious on risk assets, then apparently Xi Jinping is the guy you call to put out the fires Trump starts.

Or at least that seems to be the market’s takeaway from Xi’s keynote address at the Boao Forum in Asia on Tuesday. U.S. futures begin rising sharply as Xi spoke and the optimism was reflected in equities across the globe.

Xi’s speech was conciliatory but vague enough to be largely meaningless as anything other than a near-term palliative when it comes to the trade disputes. He said China would reduce import tariffs on vehicles, pledged to lower restrictions on foreign investments in the auto industry and mentioned IP protections. He talked about opening up China’s economy and reiterated his call for humanity to pursue a shared destiny, a line he pushed in Davos last year.

He jabbed at Trump multiple times, saying no nation should “seek dominance” and suggesting that “cold war, zero-sum mentalities” are “out of place” in modernity.

Specifically, Xi said “the trend of peace and cooperation is moving forward and a Cold War mentality and zero-sum game thinking are outdate.”

“It’s a good thing Xi is bringing this tone to it because markets would be very upset if he played it like Trump,” Nikko Asset Management’s James Alexander, said overnight.

“Clearly this is positive for EM Asian FX, especially those closest to the China-U.S. trade spat,” Natixis’s Trinh Nguyen added.

“Xi explicitly did not continue the trade war rhetoric so this is going to be risk friendly and the market will be relieved,” SocGen’s Kit Juckes chimed in.

Lagarde was impressed. “You have not only said that in general terms, you have been very specific — opening sectors: Banking, insurance, automotive, removing caps, reducing barriers, providing a more business friendly environment,” she said in her speech at Boao.

You get the idea. Folks were pleased. And it showed in equities. Mainland shares in China were higher, but it looks like they might have gotten some state help in the afternoon (maybe someone wasn’t impressed with the domestic reaction to Xi’s soothing words):

The northbound links were popping on Tuesday. Investors bought a net 3.5 billion yuan of mainland shares through the trading links with Hong Kong. As Bloomberg notes, that means the two-day inflow is the largest since January 4-5.

The yuan gained with dollar selling increasing during Xi’s speech. Here’s a look at how things have panned out for the offshore yuan since the Monday Bloomberg story that suggested the PBoC is looking at a staggered devaluation as a way of responding to Trump:

H-shares led the way in Hong Kong, where the gains were substantial:

And really, if you want to get a sense of things, just have a look at S&P futs since last Thursday:

Now the only question is whether Trump fucks it all up with a tweet or five.