Asia stocks rise on AI, US-China trade talks optimism

HONG KONG: Asian stock markets mostly rose on Monday (Sep 21), boosted by global demand for artificial intelligence technology and positive signals from trade talks over the weekend between Chinese and US officials.

Global stocks had finished last week mixed as central banks made moves to curb inflation, including the US Federal Reserve's decision on Wednesday to lift interest rates.

US and Chinese economic officials met on Sunday for closely watched talks on trade and AI, ahead of a summit on Thursday between US President Donald Trump and Chinese President Xi Jinping in Washington.

US Treasury Secretary Scott Bessent said that following lengthy conversations, the two countries had discussed setting up a channel to communicate about AI issues called the "US-China AI dialogue".

Chinese state media described the talks as "candid, in-depth and constructive".

Hong Kong's main index finished Monday's trading with a gain of 1.2 per cent, while shares in Shanghai rose 1 per cent.

South Korea's tech-heavy benchmark finished the day up 1.7 per cent.

Tokyo was closed for a public holiday, while Sydney's main index finished flat.

Pressure has increased on monetary authorities around the world in recent months as oil prices remain elevated due to the war between the United States and Iran, which shows little sign of ending soon.

At the talks between Trump and Xi, "the area with the most potential to move markets is probably any Chinese cooperation on Iran, given recent oil and bond market volatility", wrote Thomas Mathews of Capital Economics.

"Given China's apparent unwillingness to help so far, though, investors probably shouldn't hold out too much hope," he added.

In a widely expected move, the Bank of Japan raised interest rates on Friday to a three-decade high, but the yen sank against the dollar on fears the pace of hikes might be slower than expected.

The 25-basis-point hike to 1.25 per cent was expected by markets following the recent tightening by the European Central Bank and the US Federal Reserve, though the decision was not unanimous as it was carried by a 7-2 majority vote.

Oil prices fell on Monday, adding to Friday's declines on hopes that Saudi Arabia was moving to restore about half of crude shipments within days after they were disrupted by the stoppage of its East-West pipeline to the Red Sea.

But both major crude contracts remain around US$100 a barrel, significantly higher than pre-war levels.