At 2 p.m., the presidents of China and the USA will also meet virtually. While Joe Biden’s poll numbers are benefiting from the Corona policy, the recent outbreak in China is likely to weigh on President Xi Jinping’s approval ratings. In Hong Kong, as many people died of Corona in February as officially in all of China in the entire pandemic. Regarding the war in Ukraine, the US fears that China may abandon its neutrality towards Russia and support Putin. In such a case, the price gains of Chinese stocks would quickly be wiped out. The question is also whether Beijing can negotiate a deal with the US to prevent Chinese stocks from being delisted from Wall Street. So there are enough sensitive topics for this meeting, and the potential for conflict is just as high.
In the stock market, many investors now seem to be at a point where they are trading more of the scenario they would like to see rather than the scenario that is actually playing out. The Fed announces a quick turnaround in interest rates, but the market doesn’t believe the Fed and rises. Putin has denied any progress on the ceasefire talks, but the market prefers reports to the contrary. Chinese stocks have risen sharply even as the US suspects the Beijing government may back Putin’s war. Something doesn’t add up here, so caution is advised.