Asian stocks, which were won by the weekend talks on Monday, show that progress has been made by easing trade tensions between the US and China.
The Japanese and South Korea benchmark indexes were higher in early trading on Monday mornings. While Hong Kong and China's Shenzhen shares rose about 1%, Futures pointed to similar profits on the S&P 500 as trading begins in New York.
A meeting in Geneva between US and Chinese officials concluded Sunday with US Treasury Secretary Scott Bescent, saying “substantial progress” has been made. His Lifeng, the deputy prime minister of China, was called “candid, detailed and constructive.” Details are expected to be released Monday, both sides said.
The meeting was the first between Washington and Beijing as President Trump pushed tariffs on China's imports to 145% and China retaliated with its own 125% tax on US goods. The higher the tariffs, the higher the more effectively it blocks much of the trade between the two countries.
An escalating trade war has made financial markets uneasy, and meetings can raise investors' hopes and ultimately lower tariffs.
Analysts at financial services firm Wedbush Securities said the talks were “a positive step in the right direction.” They expected the initial agreement announced during the US day on Monday would involve a “far lower level” of tariffs of “at least.”
Economists warn that intense trade barriers have significantly increased the chances of an economic recession. This includes Asia, where some of the largest economies, including Japan and South Korea, rely heavily on both China and the US as trading partners.
The World Trade Organization predicts that by continuing to divide the world economy into “rival blocs,” it will reduce global total product by nearly 7% over the long term. Earlier this month, Japanese officials cut more than half of their growth forecast this year.
Last week, China reported that exports to the US in April fell 21% from the previous year. Recession warnings are beginning to emerge in the US.
Heading into the weekend, investors had relatively low expectations for a breakthrough in consultations that would result in meaningful reductions in tariffs. Many analysts hoped the discussion would revolve around determining what each aspect wanted and how negotiations would move forward.
Recently, Trump opened the door to reducing tariffs. Last week, he suggested that tariffs could be reduced to 80%. Commerce Secretary Howard Lutnic told Fox News that so-called mutual tariffs on trade with China could settle nearly 34%.
