Asian stock markets continued their upward march on Tuesday, building on recent gains as investors remained hopeful about the ongoing trade negotiations between China and the United States in London.
With the high-stakes talks moving into a second day, positive remarks from a top White House adviser further fueled optimism for a potential easing of tensions between the two economic giants, setting a generally upbeat tone across the region, including an expected higher open for Indian benchmarks like the Sensex.
The positive momentum in Asian equities followed a generally positive session on Wall Street, where the S&P 500 edged closer to record highs seen earlier in the year.
This week’s meeting in London is crucial, aiming to smooth relations after US President Donald Trump had accused Beijing of not honoring an agreement made at a previous meeting of top officials in Geneva.
That earlier meeting had resulted in both sides temporarily slashing tit-for-tat tariffs.
A key focus of the current talks is expected to be the export of rare earth minerals, which are vital for a wide range of technologies, including smartphones and electric vehicle batteries.
Kevin Hassett, President Trump’s top economic adviser, told CNBC on Monday, “In Geneva, we had agreed to lower tariffs on them, and they had agreed to release the magnets and rare earths that we need throughout the economy.”
He acknowledged that while Beijing was releasing some supplies, “it was going a lot slower than some companies believed was optimal.”
Despite these lingering issues, Hassett expressed confidence in the current negotiations, stating he expected “a big, strong handshake” at the conclusion of the talks.
“Our expectation is that after the handshake, any export controls from the US will be eased, and the rare earths will be released in volume,” Hassett added.
He also hinted that the Trump administration might be willing to ease some recent curbs on technology exports. President Trump himself told reporters at the White House, “We are doing well with China. China’s not easy. I’m only getting good reports.”
This optimistic rhetoric resonated across Asian trading floors.
Tokyo led the gains, with markets in Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Wellington, and Jakarta also showing strong advances.
“The bulls will layer into risk on any rhetoric that publicly keeps the two sides at the table,” noted Chris Weston of Pepperstone.
“And with the meeting spilling over to a second day, the idea of some sort of loose agreement is enough to underpin the grind higher in US equity and risk exposures more broadly.”
Broader market focus: US inflation and Fed policy
Beyond the immediate trade talks, investors are also keenly awaiting key US inflation data due this week.
These figures could significantly impact the Federal Reserve’s monetary policy decisions, especially amid warnings that President Trump’s tariffs could refuel inflation, thereby strengthening the argument for keeping interest rates on hold.
However, the Fed also faces pressure from the President to cut rates, with bank officials scheduled to make a decision at their meeting next week.
While recent US jobs data has somewhat eased concerns about the American economy, analysts maintain a degree of caution.
“Tariffs are likely to remain a feature of US trade policy under President Trump,” stated Matthias Scheiber and John Hockers at Allspring Global Investments.
They acknowledged that “A strong US consumer base was helping buoy the global economy and avoid a global recession.”
However, they also warned, “The current global trade war coupled with big spending cuts by the US government and possibly higher US inflation could derail US consumer spending to the point that the global economy contracts for multiple quarters.”
Indian markets set for positive continuation; Sensex on a roll
Indian equity benchmarks, the BSE Sensex and the NSE Nifty50, are set to open with marginal gains on Tuesday, looking to extend their four-session winning streak. The positive cues from Asian peers are providing a supportive backdrop.
At 8:15 a.m. IST, GIFT Nifty futures were up 62 points, or 0.25%, at 25,244, indicating a firm opening for the domestic bourses.
On Monday, the Indian equities market continued its upward trajectory for the fourth straight session.
Optimism sparked by the US-China trade talks, combined with the positive impact of the Reserve Bank of India’s monetary policy action on Friday, further lifted spirits.
The BSE Sensex ended Monday 256.22 points, or 0.31%, higher at 82,445.21, and the NSE Nifty closed at 25,103.20, up by 100.15 points, or 0.4%.
Outperforming the main indices, the BSE midcap index ended 1.1% higher, while the BSE smallcap index settled up by 1.2%.
Over the last four sessions, the Sensex has risen by an impressive 1,708 points, while the Nifty has climbed 2.3% during the same period.
This rally has seen the total market capitalization of all listed companies on the BSE surge by more than ₹11.07 lakh crore to ₹455.11 lakh crore.
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