Asia: Stocks muted with all eyes on Trump-Xi meeting
ASIAN stocks were subdued on Thursday morning, with investors closely watching talks between the leaders of the United States and China for potential breakthroughs to defuse a damaging trade war.
Presidents Donald Trump and Xi Jinping met for the first time since 2019 in Busan, South Korea, engaging in high-stakes talks about the relationship between the world’s top two economies.
The meeting comes after days of a tech-fuelled bull run in global markets, boosted further by an interest rate cut in the United States, confirmed on Wednesday by Federal Reserve Chair Jerome Powell.
But Powell’s announcement also cast doubt on an additional cut in December, jolting US markets and lifting the value of the dollar.
The Nasdaq later recovered, finishing at a fourth straight record after another gain by artificial intelligence giant Nvidia, which became the first company to reach a US$5 trillion market value.
A “cautious reaction” is expected in Asia, wrote Lorraine Tan, director of equity research for the region at Morningstar, in a note.
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“The decline in US rates provides more flexibility to the Asian central banks to lower if they want to as there may be some pressure on the USD,” she said.
Main benchmarks were nearly flat during Thursday morning trading in Tokyo, Shanghai and Sydney.
Hong Kong – back from Wednesday’s public holiday – and Taipei tracked moderate gains.
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Stocks in Seoul surged by more than one per cent, helped partly by tech giant Samsung Electronics posting a 32 per cent rise in profits on-year for the third quarter and strong automotive gains.
Attention is now laser-focused on talks between Trump and Xi, which began with a handshake and friendly greetings before closed-door discussions between the two sides’ delegations.
Before the talks kicked off in earnest, Xi said the the two countries “should be partners and friends”, while Trump said they would have a “fantastic relationship for a long time”.
Markets have been boosted by comments this week by Trump expressing confidence that a sweeping deal can be struck with Beijing.
Among the key issues that could be discussed are the supply of rare earth minerals – a strategic sector currently dominated by China — competition over artificial intelligence and computer chips and geopolitical hotspots, including Ukraine and Taiwan. AFP
