Asian Markets Soar to Record Highs on Renewed US-China Trade Deal Optimism

Asian markets surged to record-breaking levels on Monday as investors responded with enthusiasm to signs of progress in US-China trade negotiations, reigniting global risk appetite and driving a broad rally across stocks and commodities.

The Nikkei 225 led the charge, smashing past the 50,000 mark for the first time in history, while South Korea’s KOSPI jumped above 4,000, and Taiwan’s TWII also notched a new high. MSCI’s broadest index of Asia-Pacific shares advanced 1.3%, hitting an all-time peak.

The rally was triggered by news that top US and Chinese economic officials had outlined a framework for a potential trade deal, which Presidents Donald Trump and Xi Jinping are expected to discuss later this week during a pivotal meeting in South Korea.

“The mere concept of a deal was enough to send markets higher,” said Charu Chanana, Chief Investment Strategist at Saxo. “What investors want now is confirmation that the truce will hold and translate into real economic momentum.”

Safe Havens Slide, Risk Assets Rally

With investor nerves calming, traditional safe-haven assets lost ground:

Gold slipped 1%.
US Treasuries sold off across the curve, pushing the 10-year yield to 4.04%, the highest in over a week.
The Australian dollar, often seen as a China proxy, climbed 0.42% to $0.6541, nearing a two-week high.

Commodities, including soybeans, corn, and wheat, all saw gains on hopes that tariffs and export controls will be paused.

Central Bank Decisions Loom Large

Despite the risk-on mood, global markets remain alert ahead of major central bank meetings this week:

Federal Reserve (US): Expected to cut interest rates by 25 basis points.
Bank of Japan, European Central Bank, and Bank of Canada: Expected to hold rates steady.

The Fed’s decision is clouded by uncertainty stemming from the US government shutdown, which has disrupted economic data flows.

All Eyes on Megacap Earnings

Investors will also be watching closely as the “Magnificent Seven”—Microsoft, Apple, Amazon, Alphabet, Meta, and others—report earnings this week. These tech titans remain key drivers of US market momentum, particularly in the AI sector, despite their narrowing lead over the broader index.

“The tone set by Big Tech will shape sentiment not just for this week, but potentially for the rest of the quarter,” noted Saxo’s Chanana.

The surge in equities reflects a renewed sense of optimism among global investors, but with so much hinging on a potential US-China agreement and central bank policy shifts, markets remain on edge. A solid trade deal and strong corporate earnings could cement this rally—or reverse it just as quickly.

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