Optimism surged across most Asian stock markets on Friday, as investors grew increasingly hopeful that the worst of the trade war initiated by Donald Trump was behind them. This positive sentiment followed an agreement between the United States and the United Kingdom and hints from Trump that tariffs on China might be reduced. Officials are preparing for high-stakes talks this weekend.
Since the U.S. president’s announcement of the so-called “Liberation Day” blitz last month, market sentiment has significantly improved, although it has also led to heightened concerns about a global economic slowdown.
Multiple countries are now queuing up to engage with Washington to avoid the implementation of the highest tariffs. The tariff rates on Chinese goods range from 10% to 145%, with China being a major target for Trump.
UK Leads with a Trade Agreement
On Thursday, the United Kingdom took the lead in announcing a trade deal with the U.S. that lowers car tariffs. This deal also removes tariffs on steel and aluminum, while the UK opens up its market to U.S. beef and other agricultural products. Despite some areas still needing discussion, both U.S. President Donald Trump and UK Prime Minister Keir Starmer have expressed praise for the “historic” agreement. Trump noted that this deal should serve as a model for other countries.
Traders Eye US-China Talks with Cautious Optimism
However, analysts suggest that traders are even more excited about Republican leaders’ comments regarding upcoming talks with China. Trump hinted that the U.S. might ease its harsh measures against the world’s second-largest economy. This could potentially lead to a reduction in China’s tariffs, which currently stand at 125% on U.S. goods.
In remarks to the press, Trump indicated that the talks would be “substantial.” When asked whether there was a possibility of lowering tariffs, he said, “It’s possible.”
“We’ll see. It can’t go any higher now. It’s already at 145%, so we know it will come down. I believe our relationship will be very good,” he added.
Critical Talks in Switzerland
U.S. Treasury Secretary Scott Bassent and U.S. Trade Representative Jamison Greer are set to meet Chinese Vice Premier He Lifeng in Switzerland over the weekend. This will mark the first meeting between the two superpowers since Trump’s announcement of additional tariffs.
The U.S. president also mentioned that his administration would push for tax cuts, a promise made during his election campaign. “This country will reach a tipping point, and you’d better buy stocks,” Trump said. “Now, let me tell you, this country is going to rise like a rocket.”
Market Reaction and Global Recovery
Stephen Innes from SPI Asset Management stated, “Just like the UK deal, Trump’s remarks about China have sent a clear signal to the markets – the risk baton is now being passed to Asia in a friendly, optimistic way.”
Asian stock markets followed Wall Street’s lead, continuing the upward trend from earlier in the week. Tokyo’s stock market rose by over 1%, driven by hopes of trade talks with Japan. However, U.S. Commerce Secretary Howard Lutnick warned that reaching agreements with Japan and South Korea might take longer than expected. He also mentioned that much work remains to be done with India.
Markets in Hong Kong, Sydney, Wellington, Taipei, Manila, and Jakarta also saw gains, while Seoul’s market dipped slightly. In Shanghai, the market fell in anticipation of weak trade data from China, which is expected to show significant declines starting from March due to the tariff battle.
Meanwhile, the recovery of market confidence has even helped Bitcoin, which rose to over $104,000, surpassing its previous record of $109,000 set in January.
As the U.S. continues to push forward with its trade strategy, investors are cautiously optimistic about the outcomes of these key discussions and the potential easing of tariff tensions.
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