Asian Markets Dip as Trump Meets Xi; Investors Await Trade News
URGENT UPDATE: Asian shares fell sharply on Tuesday as investors closely monitored a crucial meeting between U.S. President Donald Trump and China’s top leader, Xi Jinping, slated to take place later this week. The uncertainty surrounding potential trade agreements has left markets on edge, prompting a noticeable downturn across the region.
The Hong Kong Hang Seng index dropped 0.6% to 26,276.18, reversing earlier gains, while the Shanghai Composite index fell 0.2% to 3,988.68 after briefly exceeding 4,000, a peak not seen in a decade. Investors are seeking clarity on whether Trump can indeed secure a new trade deal with Xi during their anticipated discussions at a Pacific Rim summit in South Korea.
Japan’s benchmark Nikkei 225 also experienced a setback, losing 0.6% to end at 50,219.18. This decline follows a period of record highs fueled by Prime Minister Sanae Takaichi‘s promises of increased economic stimulus and military investment. Earlier today, Trump held meetings with Takaichi, visited a U.S. military base, and consulted with business leaders in Tokyo, reaffirming the security alliance between the U.S. and Japan.
“So Asia opens not with fireworks, but with an uneasy calm — a market breath half held,” stated Stephen Innes, managing partner at SPI Asset Management.
In Australia, the S&P/ASX 200 fell 0.5% to 9,012.50, and South Korea’s Kospi shed 0.8% to 4,010.41, despite the government reporting strong quarterly economic growth driven by robust consumption and exports.
Meanwhile, U.S. markets surged on Monday, with the S&P 500 climbing 1.2% to close at 6,875.16, the Dow Jones Industrial Average adding 0.7% to 47,544.59, and the Nasdaq jumping 1.9% to 23,637.46. This upward trend is attributed to optimism about easing trade tensions and expectations that the Federal Reserve will continue to cut interest rates.
The Fed’s next interest rate announcement is due on Wednesday, with consensus among traders leaning towards a 0.25% rate cut. However, there’s caution as inflation concerns linger, potentially influencing the Fed’s path forward.
Investors are also eyeing earnings reports from major companies this week, with notable releases from Alphabet, Meta Platforms, Microsoft, Amazon, and Apple set to shape market sentiment.
In the bond market, the yield on the 10-year Treasury eased slightly to 3.99%. In energy trading, benchmark U.S. crude slipped 14 cents to $61.17 a barrel, while Brent crude fell 18 cents to $64.72.
As the situation unfolds, traders remain cautiously optimistic, but many are waiting for concrete developments before making significant moves. The urgency of the upcoming meetings and potential trade outcomes will be pivotal for market trajectories in the coming days.
