Markets React Cautiously as Trump-Xi Summit Fails to Spark Lasting Rally

Gerik

Summary:

Despite Trump calling his summit with Xi Jinping “amazing,” Asian shares and oil prices dipped as investor skepticism grew over the long-term impact of the trade truce and tariff rollback....

Muted Market Response Despite Optimistic Rhetoric

Following the high-profile summit between U.S. President Donald Trump and Chinese President Xi Jinping in Busan, regional markets across Asia opened with volatility and ultimately closed mixed. While Trump proclaimed the talks had resolved major trade frictions and included agreements on tariffs, rare earths, and fentanyl exports, global investors appeared unconvinced that the short-term promises would translate into long-term economic stability.

Japan’s Nikkei 225 initially dropped before recovering marginally to 51,333.51, up just 0.1%, following the Bank of Japan’s decision to hold interest rates steady. Meanwhile, Hong Kong’s Hang Seng and Shanghai’s Composite Index both gave up early gains, falling 0.2% and 0.3% respectively, though they later recovered some ground. South Korea’s Kospi bucked the trend, climbing to a record 4,084.91 before flattening, driven by investor optimism around separate trade progress between Seoul and Washington as well as strong corporate earnings in the tech and shipbuilding sectors.

Oil Prices and Currencies Move with Caution

Oil markets also reflected subdued sentiment. U.S. crude dipped 24 cents to $60.24 per barrel, and Brent crude fell 22 cents to $64.10. While traders had hoped for more robust global trade volumes following the summit, the lack of immediate structural commitments on core issues such as tech exports and intellectual property weighed on energy demand expectations. On the currency front, the dollar edged up to 152.94 yen, while the euro slightly strengthened to $1.1627.

Despite Trump’s headline announcement that average tariffs on Chinese goods would be cut from 57% to 47%, investors noted the changes were largely incremental. The rare earth licensing freeze while welcomed is only a one-year delay, not a dismantling of China’s strategic export control regime. Likewise, the promised surge in soybean purchases, though politically important for U.S. domestic agriculture, lacks detailed enforcement guarantees.

Moreover, the absence of a Chinese official statement following the summit has reinforced doubts about the scope and sincerity of the commitments. The asymmetry in communication with Trump providing most of the details has added to market caution.

U.S. Market Signals Mixed Sentiment

Back in the U.S., equities were also subdued. The S&P 500, Dow Jones Industrial Average, and Nasdaq all hovered near record levels, but only the Nasdaq posted a modest gain of 0.5%. The Fed’s latest rate cut initially spurred optimism, but Fed Chair Jerome Powell’s comments cast doubt on the likelihood of further easing, noting that another cut in December was “far from” guaranteed. This policy ambiguity introduced further uncertainty into equity and bond markets.

The broader market remained influenced by corporate earnings and the continued rally in artificial intelligence stocks. However, as valuation levels stretch, analysts warned that companies will need to deliver strong fundamental performance to justify their elevated prices. This tension between growth-driven optimism and macroeconomic risk is shaping investor behavior across global markets.

Despite Trump’s confident assertions, the market reaction to the U.S.-China summit has been cautious. While the meeting marks a temporary easing of trade tensions, the limited scope and time-bound nature of the agreements along with the absence of structural reform or mutual legal enforcement leave investors seeking more concrete evidence of long-term stability. For now, sentiment remains fragile, and markets appear to be signaling that words must be matched with sustained action.

Source: AP

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