Asian stocks rally after US-China trade breakthrough

Asian stock markets surged on Monday after a breakthrough in trade negotiations between the United States and China, raising hopes that Presidents Donald Trump and Xi Jinping will finalise a deal later this week and avert a renewed escalation in their long-running trade dispute.

The rally followed comments from US Treasury Secretary Scott Bessent, who said the threat of an additional 100% tariff on Chinese imports was now “effectively off the table” after productive weekend talks in Malaysia. “The tariffs will be averted,” Bessent told ABC News, adding that China had agreed to delay new export controls on rare earth minerals and resume “substantial” purchases of US soybeans.

Chinese Vice Premier He Lifeng confirmed that the two sides had reached a “preliminary consensus” covering tariffs, export policies, and cooperation on fentanyl control, describing the discussions as “candid, in-depth and constructive.”

The progress sets the stage for Trump and Xi to meet Thursday in South Korea on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit, marking their first face-to-face meeting since Trump’s return to office.

Asian equity markets reacted strongly to the news, with shares in Japan and South Korea jumping around two percent in early trading. Hong Kong, Shanghai, and Taipei also opened higher, mirroring gains on Wall Street from Friday when softer US inflation data lifted expectations of another Federal Reserve rate cut.

Speaking to reporters in Kuala Lumpur, Trump said he was optimistic about reaching a “comprehensive agreement” with Beijing. “They want to make a deal and we want to make a deal,” he said.

The breakthrough, which comes after months of heightened tensions, followed China’s October move to expand export controls on rare earth minerals—materials crucial to global manufacturing. In response, Trump had threatened to impose sweeping new tariffs on Chinese imports. Under the new framework, however, Beijing will defer its rare earth restrictions “for a year while they reexamine it,” Bessent confirmed.

Trump is currently on a five-day tour of Asia, with visits to Malaysia, Japan, and South Korea. Trade cooperation and market access are central themes of his trip, as the White House seeks to reinforce economic ties across the region.

Futures for key commodities such as copper also climbed on Monday, buoyed by optimism that easing trade tensions will strengthen global industrial demand.