Asian stocks gained on Friday after US President Donald Trump signaled tariffs on Chinese goods may fall if the official level talks this weekend go well.
Japan’s Topix advanced for a 11th day, set for its longest winning streak since October 2017. Hong Kong shares fluctuated. Treasuries were little changed at the open after yields surged in the prior session, with traders paring bets on easing interest rates. Gold was on track for a third day of losses.
Investors remain focused on the outcome of the first official trade talks between the US and China this weekend in Switzerland. Markets took some comfort and US stocks gained Thursday as Trump pitched his trade framework with the UK as the first step in his effort to overhaul the global economy. Trump said he believed the negotiations with China might result in tangible progress.
“I suppose we can expect some progress in future agreements with other countries as well,” said Hideyuki Suzuki, a general manager at SBI Securities in Tokyo. “Risk-on sentiment is spreading in response to the strong performance of US stocks.”
Trump also said that promising trade news paired with Republican efforts to pass legislation extending and expanding his signature tax cuts should be reason for investor optimism.
Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer are set to meet in Switzerland with Chinese Vice Premier He Lifeng on trade in the coming days. Trump said that if talks went well, he could consider lowering the 145% tariff he has imposed on many Chinese goods.
“Tariffs are steering the boat again,” said Louis Navellier, chief investment officer at Navellier & Associates. “We are seeing a risk-on sentiment. The fear of missing out on favorable agreements being reached has limited the number of sellers.”
Meanwhile, Japan’s chief trade negotiator Ryosei Akazawa said the country and the US ave agreed that they will try and reach an agreement as soon as possible that can be announced by their leaders. Japan’s stance is unchanged in that it will continue to seek a rethink of the various tariff measures, he said.
While the real game-changer would be progress with China, that’s where it gets murky, according Fawad Razaqzada at City Index and Forex.com.
“The weekend meeting between the US and China feels more like a diplomatic icebreaker than a breakthrough moment,” Razaqzada noted. “We could be in for a long, drawn-out negotiation season, which may limit the upside potential for risk assets.”
Elsewhere, India said it “neutralized” Pakistani drone and missile attacks targeting several military sites on Thursday night, marking an escalation in hostilities between the two nuclear-armed neighbors.
In commodities, oil climbed, reflecting optimism about the potential for further US trade deals.
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