Asia markets mixed ahead of U.S.-China trade talks

July 28, 2025 (MLN): Asia-Pacific markets traded mixed on Monday as investors awaited further clarity on trade negotiations between the United States and China, set to commence later in the day in Stockholm.

The talks, led by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, are expected to focus on a range of issues including Beijing’s oil purchases from Russia and Iran.

Bessent indicated in an interview with Fox Business that a 90-day extension to the current trade truce is likely, as CNBC reported.

The negotiations come on the heels of a framework agreement reached between the U.S. and the European Union.

President Donald Trump announced the deal on Sunday, which includes a 15% import tariff on most EU goods, half of the previously threatened 30%.

The agreement follows last week’s trade deal with Japan, which reduced proposed tariffs on auto imports.

Countries are rushing to finalize trade deals before the August 1 deadline set by President Trump.

Analysts suggest the U.S.-EU deal has diffused a major tail-risk, offering businesses some predictability in trade policy.

“A 15% tariff on European goods, forced purchases of U.S. energy and military equipment and zero tariff retaliation by Europe, that's not negotiation, that's the art of the deal," said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities. "A big win for the U.S."

Markets responded positively to the news. S&P 500 futures rose 0.4%, Nasdaq futures gained 0.5%, and European futures surged nearly 1%.

The euro strengthened broadly against the dollar, sterling, and yen. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.27%, near a four-year high touched last week.

Japan's Nikkei, however, fell 0.8% after hitting a one-year high last week.

In regional highlights, Japanese semiconductor equipment maker Advantest plunged over 10% in early trade, while Samsung Electronics’ shares advanced following its $16.5 billion semiconductor supply contract with Tesla.

Hong Kong’s CK Hutchison is seeking a Chinese firm as a major strategic investor for a BlackRock-led consortium bidding for its ports business.

Vietnam’s stock market extended gains for a fifth consecutive session, hitting a new high, while Indonesian stocks rallied to a nine-month high on their fourth straight session of gains.

China’s blue-chip stocks climbed 0.3% and Hong Kong’s Hang Seng index rose 0.75%.

The Australian dollar hovered at $0.657, near an eight-month high, signaling improved risk sentiment.

Investors are also eyeing key monetary policy meetings from the Federal Reserve and the Bank of Japan this week, along with the U.S. monthly employment report and earnings from major tech firms Apple, Microsoft, and Amazon.

While both central banks are expected to hold rates steady, their commentary will be closely monitored.

The trade deal with Japan has created room for the BOJ to consider a rate hike later this year, while the Fed appears cautious about further rate cuts.

Tensions persist between the White House and the Fed, with President Trump repeatedly criticizing Fed Chair Jerome Powell for not cutting rates.

Two Trump-appointed Fed board members have expressed support for a rate cut this month.

“Inflation readings, particularly the PCE index, and the upcoming July jobs report will shape expectations beyond this meeting, with the next likely policy pivot now pushed out to September if inflation continues to ease,” said Kieran Williams, head of Asia FX at InTouch Capital Markets.

In commodities, oil prices gained following the U.S.-EU deal. Brent crude futures and U.S. West Texas Intermediate crude both rose 0.5%.

Meanwhile, gold prices dropped to a near two-week low amid reduced safe-haven demand.

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