Most Asian markets extend rally in glow of China-US truce
A man looks at an electronic board displaying sector performances related to Nikkei index outside a brokerage in Tokyo, Japan, May 13, 2025. (Photo: Reuters/Kim Kyung-Hoon)
HONG KONG: Most Asian stocks extended gains on Tuesday (May 13) as investors basked in the glow of the China-United States tariff suspension that has fuelled hopes the world's two economic superpowers will step back from a punishing trade war.
Equity markets across the world rallied with oil and the dollar on Monday after the two sides said they would slash most of their eye-watering tit-for-tat levies and hold talks to end a standoff that has stoked recession fears.
The news raised hopes that deals can be done with Washington to cut or even remove some of the tolls unveiled by President Donald Trump on his "Liberation Day" on Apr 2 that sent shivers down trading floors and raised concerns about the global trading system.
Top-level negotiators said after two days of talks in Geneva at the weekend that the US would reduce its 145 per cent duties on China to 30 per cent for 90 days, while Beijing would cut its retaliatory measures to 10 per cent from 125 per cent.
The US president described the move as a "total reset" and said talks with counterpart Xi Jinping could soon follow, while US Treasury Secretary Scott Bessent told CNBC he expected officials would meet again in the coming weeks to reach "a more fulsome agreement".
After piling higher on the news on Monday, most of Asia's markets started Tuesday on the front foot, with Taipei, Singapore, Seoul, Bangkok and Manila well up.Â
Japan's Nikkei soared 2 per cent in the morning session before closing 1.43 per cent higher, while the Straits Times Index was up more than 1.5 per cent in early trade.
However, some of the euphoria began to die down in other markets.
Hong Kong's Hang Seng weakened nearly 1.9 per cent, retreating from a six-week high after having surged 3 per cent the day before. Mumbai also slipped, while London, Frankfurt and Paris edged down at the open.
The Shanghai Composite Index was up 0.17 per cent and the Straits Times Index was up 0.13 per cent at closing.
Oil prices and the dollar also pulled back from the previous day's rally.
The broad gains in Asia came after Wall Street greeted the announcement with open arms.
The tech-heavy Nasdaq rocketed more than 4 per cent, the S&P 500 jumped 3.3 per cent and the Dow 2.8 per cent, while a gauge of US-listed Chinese stocks surged more than 5 per cent.
"Clearly, US-China trade talks have yielded much faster success than many had expected," strategists at HSBC wrote in a note.
"There's very clearly upside risk for the broader risk asset spectrum now as markets will likely extrapolate a higher likelihood of further deals in the coming weeks."
However, nervousness remains.
The HSBC strategists added: "These may not move in a straight line. Things could easily turn out a bit bumpier in future trade negotiations."
IG chief market analyst Chris Beauchamp said the talks show "both sides are aware of the need to repair their relationship, and avoid further damage from the imposition of such huge tariffs".
"But even at the pause levels of 10 per cent and 30 per cent, these tariffs are still much higher than anything imagined by investors just a few months ago.
"It is not quite six weeks since these tariffs were introduced - the impact has yet to really appear in both economic data and company earnings. The full impact will only become clear with time."
Federal Reserve governor Adriana Kugler warned that even with the reduction in tariffs, Trump's trade policies will likely push inflation higher and weigh on economic growth.
