Asian markets climb amid trade war optimism

May 09, 2025 (MLN): Asian equities mostly advanced on Friday, May 9, driven by growing optimism that the peak of Donald Trump's trade war may be over.

The positive sentiment followed a trade agreement with Britain and signs the U.S. might ease tariffs on China ahead of key negotiations this weekend.

Investor confidence has notably improved since Trump's "Liberation Day" announcements last month, which had previously shaken global markets and raised concerns of a global downturn.

Now, with several nations seeking discussions with Washington to reduce steep tariffs ranging from 10% to 145% hopes for a more stable outlook are rising.

On Thursday, Britain became the first country to finalize a deal with the U.S., which cuts tariffs on British cars and removes duties on steel and aluminium.

In exchange, Britain agreed to open its markets to U.S. beef and other agricultural goods.

While further discussions are still needed, both Trump and UK Prime Minister Keir Starmer called the agreement "historic" and suggested it could serve as a model for future deals.

However, analysts say that markets were more buoyed by Trump's remarks regarding upcoming negotiations with China, as CNA reported.

He hinted that some of the harsher tariffs targeting the world's second-largest economy might be scaled back. In turn, China might lower its 125% tariffs on American products.

Trump noted that he expected the talks to be "substantive" and, when asked about potential tariff reductions, responded: "it could be." He added, "Right now you can't get any higher. It's at 145 per cent so we know it's coming down. I think we're going to have a very good relationship."

Scheduled for this weekend in Switzerland, U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will meet Chinese Vice Premier He Lifeng for the first high-level talks since the tariffs were implemented.

At home, Trump also signaled progress on implementing the tax cuts he promised during his campaign, urging Americans to invest in stocks: "This country will be like a rocket ship that goes straight up."

Stephen Innes of SPI Asset Management commented that while the UK deal was significant, Trump's softened stance on China was the more powerful message for markets, triggering a wave of optimism across Asia.

Asian markets extended their rally, following Wall Street’s gains. Tokyo rose over 1% on expectations tied to Japan’s trade negotiations.

However, Commerce Secretary Howard Lutnick cautioned that agreements with Japan and South Korea may take longer, and said reaching a deal with India would require considerable effort.

Markets in Hong Kong, Sydney, Wellington, Taipei, Manila, and Jakarta also moved higher, while Seoul recorded a decline.

Shanghai dipped ahead of the release of Chinese trade data expected to show a steep slowdown from March, likely due to the ongoing trade tensions.

The improving investor mood also boosted bitcoin, which climbed back above $100,000 for the first time since February, reaching $104,159 on Thursday and approaching its January peak of over $109,000.

Copyright Mettis Link News