Asian stock markets edged higher on Wednesday, with Chinese equities at the forefront following confirmation of renewed trade negotiations between China and the United States. This development reignited hopes for a potential easing in trade tensions that have weighed on global growth.
Chinese Stocks Rally on Trade Optimism
China’s Shanghai Composite and the Shanghai Shenzhen CSI 300 indexes both gained around 0.5%, while Hong Kong’s Hang Seng Index outperformed, rising 1.5% amid a broad regional rally. The boost came after U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer announced plans to meet Chinese officials in Switzerland this week. The announcement marked the most definitive sign of renewed trade dialogue between Washington and Beijing after weeks of diplomatic signaling.
Chinese equities also benefited from domestic support, as the People’s Bank of China moved to lower the reserve requirement ratio for local banks, signaling additional monetary easing to support the economy amid trade-related headwinds.
India in Focus Amid Geopolitical Escalation
Despite rising geopolitical tensions, Indian markets signaled resilience. Gift Nifty 50 Futures climbed 0.5% in early Asian trade, suggesting a positive open for local equities. The gains came despite heightened military conflict with Pakistan. India reported strikes on alleged terrorist bases within Pakistan, which responded with artillery fire and claims of downing Indian aircraft. This marked the worst flare-up in bilateral tensions in over 20 years, leaving investors cautious.
Regional Performance Mixed
Elsewhere in Asia, performance was more subdued. Australia’s S&P/ASX 200 gained 0.2%, supported by modest risk appetite, while Japan’s Nikkei 225 and TOPIX indexes each added around 0.3%-0.4%. South Korea’s KOSPI rose 0.4%.
Singapore’s Straits Times Index slipped 0.2%, weighed by a 1.2% drop in shares of United Overseas Bank (SGX:UOBH) after the lender posted weaker-than-expected quarterly results.
Cautious Tone Ahead of Fed Decision
Investors across the region remained cautious ahead of the Federal Reserve’s interest rate decision later in the global day. The Fed is widely expected to hold rates steady, but market participants are closely watching Chair Jerome Powell’s tone for hints on future monetary policy direction, particularly in light of persistent tariff-related inflation risks.
Despite Wall Street’s weaker close overnight, U.S. stock index futures rebounded in Asian trading. S&P 500 Futures rose 0.6% as trade optimism outweighed earlier caution.
Conclusion
While China’s trade dialogue announcement lifted regional sentiment, geopolitical concerns in South Asia and investor caution ahead of the Fed decision kept broader Asian gains in check. Markets are likely to remain sensitive to developments on both fronts throughout the week.
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