Asian Markets Rally as US-China Trade Talks Spark Fresh Optimism

Asian stock markets kicked off the week on a high note following what officials described as “substantial” progress in trade talks between the United States and China.

The weekend negotiations, held in Geneva, offered a much-needed dose of optimism to investors who have endured months of volatility amid escalating tariff tensions between the world’s two largest economies.

Markets have been on a rollercoaster ride since April 2, when President Donald Trump launched a series of aggressive tariffs, with China bearing the brunt of the measures.

At their peak, the U.S. hiked tariffs on Chinese goods to a staggering 145%, prompting China to retaliate with 125% levies. These tit-for-tat moves fueled fears of a full-blown trade war and raised the specter of a global economic slowdown.

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However, this weekend’s developments suggest a possible turning point. The talks marked the first known high-level meeting since Trump’s controversial “Liberation Day” announcement. Representing the U.S. were Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, while China was represented by Vice Premier He Lifeng and international trade envoy Li Chenggang.

After two days of intensive discussions, both sides struck a positive tone. Bessent described the talks as making “substantial progress,” while Greer noted that “differences were not as large as maybe thought.” The White House echoed this sentiment, hailing what it called a new “trade deal” — though specific details are expected to be released later on Monday.

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Chinese Vice Premier He Lifeng characterized the dialogue as “candid, in-depth, and constructive,” calling the negotiations “an important first step” toward resolving long-standing trade disputes.

Asian markets reacted positively to the weekend’s developments. Hong Kong surged over 1%, while Shanghai also saw robust buying interest. Markets in Sydney, Seoul, Taipei, and Wellington all closed in the green. Tokyo remained flat, but overall sentiment was buoyant. U.S. stock futures also jumped more than 1%, reflecting optimism that tensions could be easing.

The dollar gained strength alongside oil prices, driven by speculation that a thaw in trade tensions could boost global demand. Meanwhile, gold extended its recent losses after last month’s rally, which was spurred by investors seeking safe-haven assets.

Chris Weston of Pepperstone noted that while the upbeat market reaction was expected, it signals meaningful progress in the ongoing trade dialogue. “This represents an important step forward,” he said. “However, markets will demand action — particularly a reduction of tariffs to the speculated 60% level — and they will want it swiftly.”

Others urged caution. Karsten Junius of Bank J. Safra Sarasin warned that market volatility is likely to persist. “Financial markets have almost fully priced out negative economic surprises,” he said. “That means they’re vulnerable to setbacks if serious obstacles re-emerge in the trade negotiations.”

Investors are also closely watching upcoming U.S. economic indicators, including inflation and retail sales data due this week. These numbers will offer a clearer picture of how the American economy has fared since the tariff hikes were implemented.

While the latest US-China trade talks have sparked a wave of optimism in global markets, the road ahead remains uncertain. Investors and analysts alike are cautiously hopeful that both sides will follow up words with meaningful action. For now, the markets are breathing a sigh of relief — but the demand for concrete results remains strong.