(Sept 22) : Asian equities and Wall Street stock-index futures advanced after the US described talks with China as “very successful” ahead of a summit between Presidents Donald Trump and Xi Jinping this week. Oil fell for a fourth day.
MSCI’s Asia Pacific equities gauge climbed 0.7%, led by technology shares as benchmarks in South Korea and Taiwan — bellwethers for AI investments — advanced. S&P 500 futures rose 0.4%, while contracts on the Nasdaq 100 Index gained 0.6%. Stocks in mainland China also advanced.
Supporting sentiment, Brent dropped 2.1% to US$101.65 a barrel, set for its longest losing run since June. Lower energy prices eased inflation concerns, lifting Treasury futures, with cash trading closed during Asian hours for a holiday in Japan. Elsewhere, the yen steadied around 156.85 per dollar after falling more than 2% last week.
US and Chinese officials met in New York, with discussions led by Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. The two sides agreed to set up a dialogue on AI aimed at reaching a common understanding on goals and threats, Bessent said. China described the talks as positive.
With little major economic data due in the next few days, attention will turn to the summit following a week in which the Federal Reserve raised interest rates for the first time since 2023 and the Bank of Japan lifted borrowing costs in a split decision. The US-China talks add another layer of caution for markets already grappling with the Iran war, resurgent inflation concerns, heavy AI spending and elevated global bond yields.
“Don’t expect too many fireworks, though, because the focus is likely to be an extension of the existing trade truce rather than anything groundbreaking,” wrote Josh Gilbert, lead Asia Pacific analyst for eToro.
The US and China have been working to reduce levies on American energy and agricultural products, part of a broader initiative to ease barriers on US$30 billion worth of products from each side under the Board of Trade mechanism launched earlier this year. Since the two leaders last met in May, AI has emerged as a new flashpoint between the US and China.
The summit “is likely to do no more than keep their fragile relationship stable,” Commonwealth Bank of Australia strategists led by Joseph Capurso wrote in a note to clients.
In other corners of the market, the yen was in focus with traders on guard for sharp moves as Japan begins a three-day holiday, leaving liquidity thin. Reports Friday that BOJ officials had called market participants for a rate check also fueled speculation of preparations for intervention to support the currency.
Gold was a touch weaker at about US$4,365 an ounce. Government bonds in Australia and New Zealand edged lower, tracking the decline in Treasuries on Friday.
Expectations for additional Fed rate hikes have pushed investors toward wagers on higher yields in shorter-maturity debt. The 10-year Treasury yield closed just below 5% Friday, with cash trading resuming in London later Monday due to the Japan holiday.
German bund futures rose after Chancellor Friedrich Merz said he would stay put even after his party suffered its worst-ever result in a state election.
In commodities, US retail diesel prices topped US$6.50 a gallon for the first time, extending a war-driven rally that’s rippling through the economy.
Still, oil and liquefied natural gas shipments through the Strait of Hormuz have reached their highest level in six months over the past two weeks, a sign that US naval protection and mine-clearance efforts are “paying off,” a regional US commander said.
“Clearly, momentum is building,” Admiral Brad Cooper, head of US Central Command, said in a video message Saturday. The strait’s primary transit lanes are clear of mines, while Persian Gulf allies have shipped more than 1 billion barrels of crude through the waterway “in the last couple months,” he said.
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