Global markets mostly advanced on Tuesday as the latest round of trade negotiations between the United States and China entered a second day, with renewed optimism that progress could be made.
Investor sentiment was buoyed by comments from Kevin Hassett, one of President Donald Trump’s top economic advisers, who predicted a “big, strong handshake” to conclude the talks, which are being held in London.
The negotiations follow a recent call between Trump and Chinese President Xi Jinping, raising hopes for a breakthrough that could ease longstanding tensions and calm volatile markets.
This week’s discussions aim to mend relations after Trump accused Beijing of breaching terms agreed upon during last month’s high-level meeting in Geneva. That summit had ended with both nations agreeing to reduce reciprocal tariffs.
A central issue in the talks is the export of rare earth minerals—critical components used in smartphones, electric vehicle batteries, and other technologies. Hassett told CNBC that while China had begun releasing some supplies, “it was going a lot slower than some companies believed was optimal.”
He added, “Our expectation is that after the handshake, any export controls from the US will be eased, and the rare earths will be released in volume.” He also hinted that the White House might consider softening recent restrictions on tech exports.
President Trump sounded upbeat, telling reporters at the White House, “We are doing well with China. China’s not easy. I’m only getting good reports.”
Asian markets began the day on a positive note but faltered in the afternoon amid some uncertainty. Tokyo, Sydney, Seoul, Wellington, Taipei, Mumbai, Bangkok, and Jakarta all closed higher. However, Hong Kong and Shanghai reversed their early gains, while Singapore and Manila also slipped.
In Europe, London and Paris posted modest gains, while Frankfurt dipped slightly.
“The bulls will layer into risk on any rhetoric that publicly keeps the two sides at the table,” said Chris Weston of Pepperstone. “And with the meeting spilling over to a second day, the idea of some sort of loose agreement is enough to underpin the grind higher in US equity and risk exposures more broadly.”
Investors are also watching for key US inflation data due this week, which could influence the Federal Reserve’s interest rate decisions. While the Fed faces pressure from Trump to lower rates, recent inflation concerns tied to tariffs may prompt policymakers to hold steady. Although recent job reports have reassured investors about the health of the US economy, analysts remain cautious.
“Tariffs are likely to remain a feature of US trade policy under President Trump,” said Matthias Scheiber and John Hockers of Allspring Global Investments. “A strong US consumer base is currently helping to buoy the global economy and stave off recession.”
However, they warned that a combination of escalating trade disputes, US spending cuts, and rising inflation could eventually undermine consumer spending and trigger a broader economic downturn.
Key Market Figures as of 0810 GMT:
- Tokyo – Nikkei 225: +0.3% at 38,211.51 (close)
- Hong Kong – Hang Seng Index: –0.1% at 24,162.87 (close)
- Shanghai – Composite: –0.4% at 3,384.82 (close)
- London – FTSE 100: +0.4% at 8,862.93
- New York – Dow Jones: Flat at 42,761.76 (previous close)
Currencies:
- Euro/Dollar: $1.1392 (down from $1.1420)
- Pound/Dollar: $1.3470 (down from $1.3552)
- Dollar/Yen: 144.73 yen (up from 144.60 yen)
- Euro/Pound: 84.56 pence (up from 84.27)
Commodities:
- WTI Crude: –0.2% at $65.18/barrel
- Brent Crude: –0.1% at $66.97/barrel
