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Andrew Sheng, distinguished fellow at the Asia Global Institute at the University of Hong Kong, believes the increase in consumer confidence in China in January will herald a recovery in growth.

And fellow Republican, Congresswoman Liz Cheney, said: "Withdrawing our forces and abandoning our allies would have grave consequences, emboldening our adversaries and making war more, not less, likely."

Andreas said the advantage of choosing Palangkaraya as the new capital would be that it is "not a large city now, but it does have infrastructure, and from all accounts it is in good shape".

And now is "not the time" to let a concern about fiscal deficits "get in the way of us winning this battle", Powell added.

Analysts say investors sentiment has been lifted because oil markets were also driven by optimism following the talks between the two leaders, which exceeded market expectations.