“The expectation is that China’s reaction will mostly be confined to some signaling actions, instead of something really hurting their economy, and therefore at this stage, we view the market’s reaction has so far been relatively mild,” Becky Liu, head of China macro strategy at Standard Chartered Bank Plc, told Bloomberg Radio. “We just need to be concerned about the medium-to long-term implications.”
American depositary receipts of Baidu Inc. fell 0.6%, while those of Alibaba Group Holding Ltd. posted a 3.4% gain.
Still, investors may need to prepare for a drawn-out reaction in financial markets, something which could underpin haven assets like Treasuries.
“Pelosi’s visit carries with it the presumption of a limited time frame for a tradable response; an assumption that we’ll characterize as misplaced,” BMO’s Lyngen and Jeffery wrote in their note. “Any response could be weeks away or further and for this reason we anticipate that the geopolitical backdrop will once again contribute to the bullish underpinnings for the US rates market.”
This article was provided by Bloomberg News.