Asian stocks rise as US trade talks drive optimism

Asian stock markets mostly climbed on Monday, tracking record-breaking gains on Wall Street, as investors focused on efforts by several countries to finalize trade agreements with the United States ahead of a key deadline next week.

The rally came as the S&P 500 and Nasdaq closed at all-time highs on Friday, fueled by hopes that sweeping tariffs threatened by President Donald Trump in April—but temporarily paused until July 9—could be avoided through last-minute deals. Officials from Japan and India have extended their visits to Washington, signaling progress in talks with two of the world’s largest economies.

Investor confidence was further bolstered by comments from US Treasury Secretary Scott Bessent, who said that while not all agreements may be finalized by next week, several promising deals are on the table. “If we can ink 10 or 12 of the important 18, I think we could have trade wrapped up by Labor Day,” Bessent told Fox Business on Friday. However, Trump said in a weekend interview that he did not expect to extend the July 9 deadline, though he left the possibility open.

In a related development, Canada announced it will rescind its Digital Services Tax targeting US tech firms. Finance Minister François-Philippe Champagne said the decision was made to help resume negotiations with the United States, after Trump suspended talks in retaliation for the levy. Canada said discussions will now move forward with the goal of reaching a deal by July 21.

Markets across the region responded positively to the renewed momentum. Tokyo extended its recent rally led by technology stocks, while Shanghai, Sydney, Seoul, Singapore, Manila, and Jakarta all posted gains. However, Hong Kong, Wellington, and Taipei edged lower.

There was little reaction to data showing a continued easing in China’s factory contraction in June, as attention remained fixed on global trade dynamics.

Meanwhile, the US dollar weakened amid growing expectations of interest rate cuts. Traders increasingly believe the Federal Reserve may begin a new easing cycle this year, potentially continuing into 2026. Speculation is also rising that Trump could soon replace Fed Chair Jerome Powell with someone more aligned with his economic agenda.

On Capitol Hill, debate intensified over Trump’s “One Big Beautiful Bill,” which aims to extend his first-term tax cuts and enhance border security. The $4.5 trillion package has drawn criticism for its projected fiscal impact, with the Congressional Budget Office estimating it could add nearly $3.3 trillion to the national deficit over the next decade. Trump is pressing for the bill to reach his desk by July 4.

Key figures at around 0230 GMT

Tokyo - Nikkei 225: UP 1.6 percent at 40,809.82 (break)
Hong Kong - Hang Seng Index: DOWN 0.4 percent at 24,183.73
Shanghai - Composite: UP 0.3 percent at 3,433.80
Euro/dollar: UP at $1.1724 from $1.1718 on Friday
Pound/dollar: UP at $1.3723 from $1.3715
Dollar/yen: DOWN at 144.31 yen from 144.68 yen
Euro/pound: UP at 85.45 pence from 85.43 pence
West Texas Intermediate: DOWN 0.5 percent at $65.18 per barrel
Brent North Sea Crude: DOWN 0.3 percent at $67.57 per barrel
New York - Dow: UP 1.0 percent at 43,819.27 (close)
London - FTSE 100: UP 0.7 percent at 8,798.91 (close)