Stocks rose on Tuesday as the latest round of China-US trade talks entered its second day, bringing optimism that the negotiations will ease tensions between the two economic superpowers. The talks, which follow US President Donald Trump’s meeting with Chinese counterpart Xi Jinping last week, aim to smooth relations after Trump accused Beijing of violating an agreement made at a meeting of top officials in Geneva last month.
According to Kevin Hassett, Trump’s top economic adviser, the key issues on the agenda include exports of rare earth minerals used in smartphones and electric vehicle batteries. “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,” Hassett said. However, he noted that Beijing’s supply release was slower than expected. Despite this, Hassett expects “a big, strong handshake” at the end of the talks, adding that “any export controls from the US will be eased, and the rare earths will be released in volume”.
The Trump administration may also ease some recent curbs on tech exports. Trump told reporters at the White House, “We are doing well with China. China’s not easy. I’m only getting good reports.” Pepperstone’s Chris Weston noted that “the bulls will layer into risk on any rhetoric that publicly keeps the two sides at the table,” and with the meeting spilling over to a second day, a loose agreement could underpin the grind higher in US equity and risk exposures.
Asian markets had a mixed performance, with Tokyo, Sydney, Seoul, Wellington, Taipei, Mumbai, Bangkok, and Jakarta rising, while Hong Kong and Shanghai pared their initial rallies. London and Paris opened higher, but Frankfurt was slightly lower. Key market figures include:
- Tokyo: Nikkei 225 up 0.3% at 38,211.51
- Hong Kong: Hang Seng Index down 0.2% at 24,142.25
- London: FTSE 100 up 0.3% at 8,858.21
- West Texas Intermediate: up 0.2% at $65.41 per barrel
- Brent North Sea Crude: up 0.2% at $67.20 per barrel
Investors are awaiting key US inflation data, which could impact the Federal Reserve’s monetary policy. Analysts at Allspring Global Investments warned that “tariffs are likely to remain a feature of US trade policy under President Trump.” They added that a strong US consumer base has been buoying the global economy, but the current global trade war coupled with big spending cuts and possibly higher US inflation could derail US consumer spending.