Asian markets experienced a slight cooldown on Tuesday as investors closely watched US President Donald Trump’s visit to Japan, ahead of his highly anticipated meeting with Chinese President Xi Jinping later in the week. The meeting, scheduled to take place in South Korea on Thursday, has sparked optimism that the world’s two largest economies may reach a deal to ease their ongoing trade tensions.
Trump’s recent comments have fueled hopes of a potential agreement, leading to record highs on Wall Street on Monday. The US president’s meeting with new Japanese Prime Minister Sanae Takaichi in Tokyo resulted in the signing of an agreement on the supply of rare earths, a critical sector currently dominated by China. This development has further deepened the complexities between Washington and Beijing.
In terms of market performance, Japan’s Nikkei 225 index pared back its gains early on Tuesday after surpassing 50,000 points for the first time the previous day. Shares in Hong Kong and Sydney also recorded gentle drops, while Seoul experienced a decline of over one percent. Taipei stocks saw a slight increase, while Shanghai remained flat.
According to Chris Weston of Pepperstone, the strong start to the week on Wall Street was driven by news of a potential trade agreement between the United States and China. Despite the tumultuous trade tensions between the two nations, the current market landscape appears to be defying expectations, with the absence of US economic data due to the ongoing government shutdown limiting risk.
Trump expressed hope for a deal with Xi during a meeting on the sidelines of the Asia-Pacific Economic Cooperation summit, which will mark their first face-to-face encounter since the US leader’s return to office. Key Chinese trade negotiator Li Chenggang announced that a “preliminary consensus” had been reached with the United States.
As of 0230 GMT, key market figures included the Tokyo Nikkei 225 index down 0.4 percent at 50,287.81, the Hong Kong Hang Seng Index down 0.1 percent at 26,397.12, and the Shanghai Composite remaining flat at 39,98.28. The West Texas Intermediate crude oil price remained steady at $61.31 per barrel, while the euro rose against the dollar to $1.1658.
The meeting between Trump and Xi is expected to have significant implications for the global economy, and investors will be closely watching the outcome of their discussions. The potential for a trade deal between the United States and China could have far-reaching consequences, and the markets will likely remain volatile in the lead-up to the meeting.