(Sharecast News) - Asia-Pacific equity markets rallied on Monday after the United States and China unveiled details of a trade agreement, including a 90-day pause on new tariffs and a substantial reduction in existing levies.
The breakthrough in trade relations lifted investor sentiment across the region, driving a broad-based recovery in major indices and boosting US futures.
"Risk-on sentiment prevails as US-China trade talks show 'substantial progress', according to both sides," commented TickMill market strategy partner Patrick Munnelly.
"Over the weekend, significant developments unfolded; in summary, US-China trade discussions achieved notable advancements, but a joint statement later today will clarify specific details.
"While markets responded positively, even a reduction in US tariffs on China from 145% to 50% to 60% - as speculated last week - would still pose a considerable challenge to trade and economic activity."
Munnelly also noted that a ceasefire deal between India and Pakistan sparked a 3% rally in Indian equities.
"Additionally, the possibility of high-level Ukraine-Russia talks on Thursday depends on the ceasefire holding.
"Contributions from Federal Reserve officials reinforced Chair Powell's cautious 'wait and see' approach.
"Markets currently do not expect the first full 25bp Fed Funds rate cut until September."
Markets spark on news of US-China trade agreement
Hong Kong's Hang Seng Index led regional gains with a 2.98% surge to 23,549.46, buoyed by sharp advances in tech and electronics shares.
Sunny Optical Technology soared 14.83%, while BYD Electronic and Lenovo climbed 13.79% and 9.58% respectively.
On the mainland, the Shanghai Composite added 0.82% and the Shenzhen Component gained 1.72%, with several stocks including Jiangsu Safety Wire Rope and Zhejiang Tony Electronic hitting daily limits.
Japan's Nikkei 225 rose 0.38% to 37,644.26, as semiconductor and industrial stocks rallied.
Advantest jumped 9.04%, while Pacific Metals and Yaskawa Electric also posted strong gains.
The broader Topix index was ahead 0.31% in Tokyo, closing at 2,742.08.
South Korea's Kospi 100 advanced 1.76% to 2,601.14, lifted by electronics and construction names such as LG Innotek and Hyundai Engineering & Construction.
Australia's S&P/ASX 200 closed marginally higher by 0.03%, supported by mining stocks, with Mineral Resources up 8.31%.
New Zealand's S&P/NZX 50 added 0.57%, led by logistics and energy companies including Mainfreight and Manawa Energy.
In currencies, the dollar was last up 1.6% on the yen, trading at JPY 147.7, as it gained 0.01% against the Aussie to AUD 1.5593, and strengthened 0.35% on the Kiwi, changing hands at NZD 1.6979.
Oil prices were also firmer, with Brent crude futures last up 2.91% on ICE at $65.77, and the NYMEX quote for West Texas Intermediate ahead 3.1% at $62.91.
US-China trade talks hog the headlines, Japan current account surplus meets forecasts
Trade developments were at the top of the economic agenda, after both the United States and China reported meaningful progress in high-level trade talks held over the weekend in Switzerland, marking the first face-to-face engagement since US president Donald Trump's imposition of steep tariffs on Chinese imports earlier in the year.
US Treasury secretary Scott Bessent described the discussions as "productive and constructive", while China's vice premier He Lifeng called them "in-depth" and "candid".
Although full details remained under wraps, a joint statement was expected later in the global day, with both sides hinting at a deal that could ease tensions and establish a new framework for ongoing economic dialogue.
The talks came after the US imposed a sweeping 145% tariff on Chinese goods, prompting Beijing to respond with a 125% levy on select American products.
The tariffs rattled global markets and stoked fears of recession.
US trade representative Jamieson Greer said the emerging agreement could help narrow the $1.2trn trade deficit, and vice premier He stated that consensus had been reached on key issues, including the creation of a bilateral consultation mechanism.
The World Trade Organization called the outcome a "significant step forward", while experts urged further action to bring tariffs down from elevated levels that remain disruptive to global trade flows.
Elsewhere, Japan reported a current account surplus of JPY 3.68trn for March, slightly below the record JPY 4.06trn yen in February but broadly in line with expectations.
Reporting by Josh White for Sharecast.com.
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