This region is now largely pivoted away from the West
On a Monday shadowed by record hospitalizations and a pandemic still unresolved, global markets chose to look toward the light — finding it in Asia's surging economic data, a landmark regional trade pact, and a quiet but consequential promise from Washington that the blunt instrument of national lockdown would not be wielded again. The world's investors, long practiced in the art of weighing fear against hope, tilted toward hope.
- Record U.S. COVID-19 hospitalizations and Boris Johnson's self-isolation underscored how far the pandemic remains from over, keeping anxiety close beneath the surface.
- Asian markets surged as China's industrial output and Japan's GDP beat expectations, and fifteen nations signed the RCEP trade pact — a signal that Asia is building an economic world of its own.
- Biden's COVID advisor publicly ruled out national lockdowns, offering markets the targeted, region-by-region approach investors desperately needed to hear instead of another sweeping shutdown.
- European indices extended last week's gains, Trump's final-weeks China hawkishness was largely brushed aside, and BBVA's $12 billion U.S. sale to PNC sent a rare note of long-term corporate confidence through the session.
Global stock markets climbed Monday, carried by two currents of reassurance flowing from opposite ends of the world. From Asia came hard numbers: China's industrial output up 6.9 percent, retail sales rising 4.3 percent, and Japan's economy expanding at a 5 percent annual rate — all stronger than expected. Beneath the figures lay something more structural. Fifteen Asian nations, including China and Japan, had signed the Regional Comprehensive Economic Partnership, a sweeping trade agreement that economists described as Asia pivoting toward a self-sustaining trading sphere, one increasingly independent of the West.
Tokyo's Nikkei jumped 2.1 percent, Seoul's Kospi rose 2 percent, and Hong Kong and European markets followed suit. But the deeper relief came from Washington, where Atul Gawande, a physician on Biden's COVID advisory board, told ABC News that the incoming administration had no intention of pursuing a national lockdown — favoring targeted regional restrictions and expanded testing instead. For investors still scarred by the economic devastation of 2020's blanket shutdowns, the distinction was everything.
The reassurance arrived against a grim backdrop. U.S. COVID hospitalizations had hit a record high over the weekend, regional restrictions were tightening across the country, and Boris Johnson was self-isolating in London after a COVID exposure. Reports that President Trump planned aggressive China policies in his final weeks barely registered — the momentum of the trade deal and the lockdown pledge proved stronger.
In corporate news, Spain's BBVA agreed to sell its U.S. operations to PNC Financial Services for nearly twelve billion dollars, sending its shares up 18 percent in Madrid. It was the kind of large, forward-looking wager that suggested, beneath all the uncertainty, some measure of faith in what comes next.
Stock markets around the world climbed on Monday, lifted by a pair of reassuring signals: Asia's economy was accelerating faster than expected, and the incoming U.S. administration had no appetite for another round of nationwide lockdowns.
The numbers from the region's two largest economies told a story of momentum. China's industrial output had grown 6.9 percent over the previous twelve months, and retail sales were up 4.3 percent. Japan's economy had expanded at a 5 percent annual rate in the third quarter—better than analysts had predicted. Beyond the raw figures, there was something larger at work: on Sunday, China and Japan had joined thirteen other Asian nations in signing the Regional Comprehensive Economic Partnership, a sweeping trade agreement that would knit the region into a largely self-contained economic zone. "With RCEP, this region is now largely pivoted away from the United States and Europe into a self-sustainable trading sphere dominated by China," said Carl Weinberg, chief economist at High Frequency Economics. The message was clear. Asia was building its own world.
Investors responded. Tokyo's Nikkei 225 index jumped 2.1 percent. Seoul's Kospi Composite rose 2 percent. Hong Kong's Hang Seng climbed 0.9 percent. In Europe, the Stoxx 600 added 0.7 percent to last week's already strong 5 percent gain.
But the real salve for market anxiety came from Washington. Atul Gawande, a physician and member of President-elect Joe Biden's Covid-19 advisory board, told ABC News that the incoming administration would not pursue a national lockdown. Instead, the focus would be on widespread testing and adjusting capacity restrictions on a region-by-region basis—a far less disruptive approach than the blanket shutdowns that had roiled markets and economies a year earlier. Pierre Veyret, a technical analyst at ActivTrades, noted the market's relief: "Investors were also glad to see President-Elect Joe Biden's advisor oppose a national U.S. lockdown, despite surging virus cases."
The timing of that reassurance mattered. On Sunday, U.S. hospitalizations for Covid-19 had reached a record high, according to data from the Covid-19 Tracking Project. Across the country, regional restrictions were beginning to take hold. In Britain, Prime Minister Boris Johnson—who had himself battled the virus months earlier—was self-isolating after contact with a member of parliament who had tested positive, though he showed no symptoms himself.
Markets also shrugged off a report that President Trump intended to pursue aggressive policies against China during his final ten weeks in office. The Asian trade deal and the Biden administration's lockdown stance seemed to outweigh that concern.
In corporate news, Spain's BBVA announced it would sell its U.S. operations to PNC Financial Services for nearly twelve billion dollars. The deal sent BBVA shares up 18 percent in Madrid and gave a lift to other Spanish banks as well. It was the kind of concrete business news that suggested confidence in the future—a willingness to make large, long-term bets despite the uncertainty still hanging over the world.
Citações Notáveis
With RCEP, this region is now largely pivoted away from the United States and Europe into a self-sustainable trading sphere dominated by China.— Carl Weinberg, chief economist at High Frequency Economics
We are not in favor of a national lockdown.— Atul Gawande, member of Biden's COVID-19 advisory board
A Conversa do Hearth Outra perspectiva sobre a história
Why did Asia's trade deal matter so much to investors on this particular Monday?
Because it signaled that the world's largest region was building economic independence from the West. For markets, that's a shift in the tectonic plates—it means growth and trade flows are reorganizing themselves, and investors need to know where the money will move.
But the U.S. was still in the middle of a pandemic surge. How did that not dominate the conversation?
It would have, except Gawande's statement changed the calculus. Investors weren't betting the virus would disappear. They were betting it wouldn't trigger another economy-wide shutdown. That distinction is everything.
So the market was choosing between two fears—the virus itself, or the government's response to it?
Exactly. The virus was already priced in. What spooked markets was the uncertainty about policy. Once that cleared, even record hospitalizations became manageable.
What about Trump's reported plans against China? Why didn't that tank the market?
It might have, if it had come alone. But it arrived on the same day as the RCEP signing and the lockdown reassurance. The positive signals outweighed it. Markets are always weighing competing narratives.
And the BBVA deal—was that just a footnote, or did it signal something?
It was a signal. A major Spanish bank selling its U.S. arm for twelve billion dollars isn't a small transaction. It suggested that despite everything, major financial institutions were still willing to make big bets on the future.