Asian stocks extended their winning streak on Thursday, fueled by growing optimism that trade tensions between the United States and China could ease.
The positive momentum comes ahead of high-level negotiations set for this weekend and remarks from U.S. President Donald Trump, who hinted at a potential “major trade deal” announcement later in the day.
After months of volatility triggered by tit-for-tat tariffs and escalating rhetoric, markets appear to be entering a period of cautious optimism. Investors are hopeful that the upcoming talks will de-escalate one of the most disruptive global trade conflicts in decades.
Top U.S. and Chinese officials are scheduled to meet in Switzerland on Saturday and Sunday in what will be the first direct negotiations since the U.S. introduced sweeping new tariffs earlier this year.
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U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will face off with Chinese Vice Premier He Lifeng in what analysts see as a pivotal moment for bilateral trade relations.
The U.S. currently imposes tariffs of up to 145% on Chinese imports, with Beijing retaliating at 125%. The upcoming talks have sparked hope that the world’s two largest economies might be ready to ease hostilities and work toward a mutually beneficial agreement.
In a surprise move, President Trump posted on his Truth Social platform that he would be announcing “a major trade deal with representatives of a big, and highly respected, country” later Thursday. While he didn’t name the country, speculation quickly swirled across trading floors, with reports from The New York Times suggesting the deal may involve the United Kingdom.
The pound gained ground against the U.S. dollar in early Asian trading as markets reacted to the unconfirmed news.
Stock markets across the Asia-Pacific region tracked gains from Wall Street, with strong performances recorded in major financial hubs. Hong Kong, Shanghai, Tokyo, Sydney, Seoul, Wellington, Taipei, Manila, and Jakarta all closed in positive territory, buoyed by hopes of trade de-escalation and a steady interest rate environment in the U.S.
Despite the market rally, concerns remain over the long-term implications of U.S. trade policies. Federal Reserve Chair Jerome Powell struck a cautious tone during a press conference on Wednesday, warning of the unpredictable effects of prolonged tariffs.
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“If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment,” Powell stated. While some inflation effects may be short-lived, he noted, persistent price increases could also be a possibility.
The Fed, which left interest rates unchanged, reiterated that “uncertainty about the economic outlook has increased,” and acknowledged a higher probability of both inflation and rising joblessness.
Trump has repeatedly criticized Powell for not cutting interest rates fast enough, even going so far as to suggest removing him from office. This political pressure has raised questions about the Fed’s independence, though most analysts believe the central bank is unlikely to lower rates until July at the earliest.
“Recent job data, including last Friday’s non-farm payroll, indicate solid momentum, allowing the Fed to maintain its current stance,” said Tai Hui, Chief Market Strategist at JP Morgan Asset Management. “With only one more employment report due before the Fed’s June 17–18 meeting, the odds of a rate cut in June remain slim.”
While optimism about easing trade tensions has lifted markets for now, the outcome of this weekend’s U.S.-China talks could prove decisive. Investors will also be watching Trump’s promised trade announcement closely, as any significant agreement could shift global economic sentiment and redirect capital flows worldwide.
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