Asia report: Markets mixed as Trump, Xi reach one-year deal

(Sharecast News) - Asian markets were mixed on Thursday as investors weighed the outcome of the meeting between US president Donald Trump and Chinese president Xi Jinping, and digested cautious comments from Federal Reserve chair Jerome Powell.

Trump said he had reached a one-year agreement with Beijing covering rare earths and critical minerals and would cut fentanyl-related tariffs to 10%, but Chinese and Hong Kong equities fell as traders questioned how durable the truce would be.

Powell, meanwhile, warned overnight that another US rate cut in December was "not a foregone conclusion" after the Fed lowered its benchmark rate by 25 basis points to a range of 3.75% to 4%.

Stephen Innes, head of trading and market strategy at SPI Asset Management, said Asia's traders had largely shrugged off Powell's caution.

"Asia traders have turned tone-deaf to Eccles Building musings," he quipped.

"Powell can lean hawkish, hint at doubt, or hedge every phrase with 'data dependent,' but traders have tuned him out like static on an AM radio.

"The Fed may want to cool sentiment, but Asia woke up and went right back to doing what it's done all year - buying weakness, chasing momentum, and trading optimism as an asset class."

Nikkei notches another high as Bank of Japan stands pat

In Japan, the Nikkei 225 edged 0.04% higher to 51,325.61, with Lasertec up 21.21%, NEC Corporation rising 13.15%, and Sumitomo Electric Industries adding 6.11%.

The Topix gained 0.69% to 3,300.79 after the Bank of Japan voted 7-2 to keep its benchmark rate at 0.5%, marking the first policy meeting under new prime minister Sanae Takaichi.

The decision was widely expected, even as inflation has remained above target for 41 consecutive months.

Innes said investors saw the move as part of a regional policy shift.

"The BoJ meets under Takaichi's new leadership, expected to keep rates pinned at 0.5%," he said.

"Japan, once defined by deflation, now has a fiscal heartbeat again.

"The 'Takaichi Renaissance' isn't just political theater - it's capital strategy.

"Tokyo is being re-engineered to be both the factory and the financier of the next era."

Chinese stocks slip on uncertainty of US-China trade truce

Chinese stocks led regional losses after Trump and Xi agreed to a one-year pause in their trade dispute.

The Shanghai Composite fell 0.73% to 3,986.90 and the Shenzhen Component lost 1.16% to 13,532.13, with Guodian Nanjing Automation, Ningbo Sanxing Medical Electric and Huali Industries each down around 10%.

Under the temporary arrangement, the US was set to reduce certain tariffs on Chinese goods and ease restrictions on Chinese entities, while Beijing would suspend planned export controls on rare earths and resume large-scale US agricultural imports.

Xi called the talks constructive but stopped short of confirming a lasting deal, urging both sides to avoid a "vicious cycle of retaliation."

According to Innes, traders viewed the summit as the latest act in a familiar geopolitical drama.

"The soundtrack right now is geopolitical détente.

"Trump and Xi are in Seoul, trading firm handshakes and soft smiles, lining up a deal that might pause the world's most consequential trade fight," he said.

"China's first soybean cargoes of the season - small in volume but large in symbolism - mark a reopening of the trade spigot.

"The draft text floating through diplomatic circles talks of tariff rollbacks, relaxed export controls, and even a face-saving compromise on TikTok.

"For markets, that's enough to declare victory."

Hong Kong's Hang Seng Index slipped 0.24% to 26,282.69, weighed by declines in Sunny Optical Technology, Budweiser Brewing Company, and Techtronic Industries, each down nearly 5%.

Market sentiment remained cautious despite Trump's description of the deal as a "great success" and his pledge to visit China in April to finalise the accord.

Innes said traders were reacting more to optics than fundamentals.

"Traders know this playbook: fade the fear, ride the optics. Powell's hesitancy is yesterday's tape.

"Today belongs to the photo-op and the whisper of a thaw.

"Each headline is another chip in the global risk-on casino. Sentiment isn't reacting to data; it's front-running hope."

Seoul bourse makes gains, markets mixed down under

In South Korea, the Kospi added 0.14% to close at a record 4,086.89, led by Hankook Cosmetic, up 24.76%, Hanwha Systems, up 14.55%, and Iljin Electric, up 11.72%.

Attention turned to Seoul's trade and investment commitments with Washington, after reports that South Korea would invest $200bn in the US under a new economic partnership, with the remainder of its $350bn pledge allocated to joint shipbuilding ventures.

Innes noted that the "music of momentum" was also being amplified by a powerful undercurrent in technology.

"Behind it all, the AI leviathan rolls on," he said.

"Nvidia crossing the $5trn mark isn't just a milestone; it's a monetary event.

"Alphabet, Meta, and Microsoft together poured $78bn into capital expenditure last quarter - up almost 90% year-on-year - and that's not spending; that's sovereignty.

"Corporate capex has become the new industrial policy.

"For Asian investors, it's oxygen: every chip fab, every data-center permit, every fiber-optic trench feeds the same story - that tech is the market, and the market is tech."

Australia's S&P/ASX 200 fell 0.46% to 8,885.50, dragged lower by losses in Wesfarmers, Block Inc, and JB Hi-Fi.

Fresh data from the Australian Bureau of Statistics showed export prices fell 0.9% in the September quarter, while import prices slipped 0.4%.

Gains in gold and petroleum partly offset declines in coal and gas, suggesting resilience in key export categories despite weaker demand for industrial goods.

Across the Tasman Sea, New Zealand's S&P/NZX 50 rose 0.37% to 13,459.29, supported by gains in Freightways, Ebos Group and Argosy Property.

ANZ's monthly survey showed business confidence in the Pacific island nation at an eight-month high, with stronger sentiment in retail and signs of a modest cyclical recovery.

In currency markets, the dollar strengthened 0.63% against the yen to JPY 153.69, was steady on the Aussie at AUD 1.5210, and slipped 0.11% against the Kiwi to NZD 1.7330.

Oil prices eased, with Brent crude futures last down 0.68% on ICE at $64.48 per barrel, and the NYMEX quote for West Texas Intermediate falling by the same margin to $60.07.

Reporting by Josh White for Sharecast.com.