Stocks Edge Up, Futures Dip After China-US Talks: Markets Wrap

(Bloomberg) -- Asian stocks posted modest gains after US and Chinese officials struck an optimistic tone at the end of two days of talks aimed at defusing trade tensions. Shares in mainland China stood out.

A regional stock gauge edged up 0.3%. Hong Kong’s 1% advance and mainland China’s 0.9% move were the biggest gains in the region. US equity-index futures dipped 0.3% as investors searched for details from the talks in London. Contracts for European equities fell 0.4%. 

Treasuries steadied ahead of Wednesday’s US inflation reading. A gauge of the dollar strengthened 0.1% and gold rose 0.5%.

The US and China de-escalated trade tensions, agreeing to a preliminary deal on how to implement the consensus reached in Geneva, negotiators for both sides said. While the full details of their accord weren’t immediately available, US negotiators said they “absolutely expect” that issues around shipments of rare earth minerals and magnets will be resolved with the framework implementation.

“While both sides touted progress at the London talks, there is still work to be done to get a concrete agreement in place, which leaves room for potential hiccups and uncertainty,” said Tim Waterer, chief market analyst at KCM Trade in Sydney. “These factors may cap enthusiasm on Asian markets today.”

Financial markets were closely watching whether the world’s largest economies can find a way to tamp down trade tensions that economists say have tipped the world economy into a downturn, with the US among the hardest hit. Despite the modest moves Wednesday, global stocks are still at a record high, having recovered from their April lows as President Donald Trump suspended his tariffs until July 9.

The talks in London came after the US and China accused each other of reneging on a deal reached in May in Geneva, where they tried to start dialing back the trade war. 

Ahead of the talks, China granted approval to some applications for the export of rare earths. Boeing Co. also began shipping commercial jets to China for the first time since early April, indicating a reopening of trade flows.

The US-China technology competition and associated export controls will remain tension points as trade talks continue to play out over the coming months, Sarah Bianchi, a strategist at Evercore ISI, wrote in a note Tuesday.

“We put higher odds on a more modest deal involving new purchase commitments and TikTok, rather than a full-fledged grand bargain including technology,” she wrote.

In other tariff news, a federal appeals court allowed Trump to continue enforcing his global tariffs. Chinese rare earths and magnets shares advance after the US and China agreed on a preliminary plan to ease trade tensions.

The market perception is that Beijing played its cards well, leveraging rare earths and possibly securing some concessions, said Charu Chanana, chief investment strategist at Saxo Markets. In contrast, US markets face a broader set of policy risks, including Wednesday’s inflation reading, uncertainty around leadership at the Federal reserve and growing unrest in Los Angeles, she said.

“These layers of risk are weighing on sentiment and keeping positioning cautious,” Chanana said.

A growing chorus of advisers inside and outside the Trump administration are pushing the name of Treasury Secretary Scott Bessent as the next chair of the Fed. Trump said Friday he would name a successor “very soon” to replace Jerome Powell, whose term as Fed chair ends in May 2026. 

Meanwhile, protests over immigration raids stretched into a fifth night in Los Angeles and led to a curfew in parts of the city’s downtown.

On US inflation, forecasters say prices likely picked up in May, reflecting a modest impact from tariff pass-through for goods that are mostly imported. The consumer price index is seen rising 0.3% from April after increasing 0.2% the previous month, excluding the volatile food and energy categories.

That may reinforce the Fed’s wait-and-see stance toward further easing as it assesses the impact of tariffs, with traders increasingly betting that the central bank will cut interest rates just once this year.

The so-called core CPI, which is regarded as a better indicator of underlying inflation, is seen accelerating for the first time this year — to 2.9% — on an annual basis, based on the median projection.

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.3% as of 1:18 p.m. Tokyo time
• Japan’s Topix was little changed
• Australia’s S&P/ASX 200 rose 0.2%
• Hong Kong’s Hang Seng rose 1%
• The Shanghai Composite rose 0.5%
• Euro Stoxx 50 futures fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro was little changed at $1.1416
• The Japanese yen was little changed at 145.01 per dollar
• The offshore yuan was little changed at 7.1867 per dollar

Cryptocurrencies

• Bitcoin fell 0.3% to $109,617.22
• Ether rose 0.5% to $2,787.31

Bonds

• The yield on 10-year Treasuries was little changed at 4.47%
• Japan’s 10-year yield was unchanged at 1.465%
• Australia’s 10-year yield advanced two basis points to 4.27%

Commodities

• West Texas Intermediate crude was little changed
• Spot gold rose 0.5% to $3,340.94 an ounce

This story was produced with the assistance of Bloomberg Automation.

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