Market sentiment across Asia has seen a substantial uplift following easing trade tensions, spurred by the commencement of Donald Trump’s Asia trip. On October 27, stock markets in Japan and South Korea opened on a high note, collectively trading at new zeniths. The Nikkei 225 index soared past the major milestone of 50,000 points, currently showing a 2.0% increase at 50,299.41 points. Meanwhile, South Korea’s Kospi index has also reached a record high of 4,000 points, marking a gain of 2%.
The rally extended across the Asia-Pacific region, with the Taiwan Weighted Index climbing 2.41% to 28,196.33, achieving another all-time high. In mainland China, indices also displayed positive momentum, with the ChiNext Index up by 1.31%, the Shanghai Composite Index rising 0.94%, and the Shenzhen Component Index increasing 1.54%. Hong Kong’s Hang Seng Index experienced a boost of 1.02%, alongside gains in the Hang Seng China Enterprises Index and the Hang Seng Tech Index of 0.91% and 1.06% respectively.
Trump’s Asia trip is poised to have a significant impact, encompassing visits to Malaysia, Japan, and South Korea over the span of five days. Upon arrival in Malaysia, Trump engaged in discussions surrounding new trade agreements with four Southeast Asian nations. These agreements maintain varying tariff levels, specifically a 19% tariff on Malaysia, Thailand, and Cambodia, while imposing a 20% tariff on Vietnam.
Following his brief stay in Malaysia, Trump is scheduled to travel to Japan, where he will spend two days before heading to South Korea. His itinerary includes a bilateral meeting with Japan’s newly appointed Prime Minister Sanae Takahashi, which is crucial as it represents her first significant summit since assuming office. Recent agreements between the U.S. and Japan hold uncertainties, notably involving tariffs, which have seen reductions on automobile imports while requiring Japan to commit substantial investments in the U.S.
In South Korea, Trump’s upcoming meeting marks a subsequent summit with President Lee Jae-myung since their initial discussion in Washington. The U.S.-South Korea trade agreement is currently under negotiation, with a 25% tariff continuing to be a sticking point. Lee highlighted the potential challenges in finalizing the trade deal before the summit, emphasizing that the maximization of U.S. interests should not come at a detrimental cost to South Korea.
On another front, discussions between the U.S. and China have made notable headway, reflecting a stabilizing relationship. Following two days of consultations in Kuala Lumpur, representatives from both nations reported reaching a fundamental consensus on trade-related concerns. U.S. Treasury Secretary Bessent commented on a “very substantial framework agreement,” marking a significant shift as the U.S. has decided against implementing an additional 100% tariff on Chinese goods.
As the reciprocal tariff suspension period between the U.S. and China approaches its expiration on November 10, this dialogue has fostered a more optimistic outlook for investors in the Asian markets. Major financial firms, including Goldman Sachs, JPMorgan, and Morgan Stanley, have started projecting a positive trajectory for China’s stock market, with expectations for substantial index growth over the coming years.
In the context of the ongoing AI revolution, this period is likely to usher in critical developments in the tech sector, as companies report their earnings. Analysts predict that the convergence of AI advancements will play a pivotal role in shaping market dynamics, underpinning a gradual but sustained upward trend in investor confidence and market performance in the region.
