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US-China Trade Talks Boost Stocks and Dollar as Tensions Eases

Strategic Insights

— 1 min read

Investors remained optimistic ahead of details from US-China trade talks, which are set to extend to a second day, with tentative signs that tensions between the world's two largest economies could be easing. Stocks were buoyant in Asia, with MSCI's broadest index of Asia-Pacific shares outside Japan advancing 0.5%, while Nasdaq futures gained 0.62%. The dollar attempted to regain its footing, up 0.45% against the yen.

Key Takeaways:

  • Stocks in Asia advanced, with MSCI's Asia-Pacific shares outside Japan index gaining 0.5% and Nasdaq futures increasing 0.62%.
  • The dollar attempted to regain its footing, up 0.45% against the yen.
  • US President Donald Trump put a positive spin on the trade talks, stating that the market is accepting the progress made.
  • Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer are set to meet with their Chinese counterparts for a second day.
  • Investors are focused on the progress of the talks, with any concrete announcements likely to provide relief to markets.
  • The Japanese government bond (JGB) market rallied, with the yield on the 10-year JGB falling one basis point to 1.46% in early trade.
  • The volatility at the super-long segment of the JGB curve stems from a supply-demand imbalance due to the BOJ's balance sheet normalisation.
  • Japanese Finance Minister Katsunobu Kato stated that the government will conduct appropriate debt management policies while communicating closely with market participants.

Statistics:

  • MSCI's Asia-Pacific shares outside Japan index gained 0.5%.
  • Nasdaq futures increased 0.62%.
  • The dollar was up 0.45% against the yen.
  • The 10-year JGB yield fell one basis point to 1.46% in early trade.
  • The 30-year JGB yield slid 5 basis points to 2.86%.
  • The dollar has fallen more than 8% for the year.
  • Traders expect the Federal Reserve to keep rates on hold at its policy meeting next week, but have priced in roughly 44 basis points worth of easing by December.

Sources:

  • Reuters
  • MSCI
  • Bloomberg

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