Market analysts react to Trump-Xi meet

SINGAPORE (Reuters) -U.S. President Donald Trump and China’s Xi Jinping concluded talks on Thursday at a South Korean air base with both leaders sounding optimistic about cooling trade tension between the world’s two largest economies.

Trump said he struck a deal to reduce tariffs on China in exchange for Beijing resuming U.S. soybean purchases, keeping rare earths exports flowing and cracking down on illicit trade of fentanyl.

Here are comments from investors and market analysts:

KYLE RODDA, SENIOR MARKET ANALYST, CAPITAL.COM, MELBOURNE:

“At the moment, the price action makes things seem like a lot of this was already priced-in.

“The markets rallied at the start of the week on the expectations of the fentanyl tariff cut and soybean purchases.

“Arguably, the markets were hoping for the complete removal of the fentanyl tariff, so that could explain the ambivalence.”

VINCENT CHAN, CHINA STRATEGIST, ALETHEIA CAPITAL, HONG KONG:

“The details are very sketchy … at the end of the day, overall tariffs for Chinese goods will be made quite similar to other Southeast Asian countries.

“The bottom line is that China and the United States are probably the most important strategic competitors of each other.

“So you cannot expect the kind of trade agreement we saw during the globalisation era … any agreement will be unstable in nature, both sides could change.”

“In a way, you can say that the market remains volatile, reacting to the good and bad news. But it’s much less volatile compared to April.

“I think gradually, people will just look at the two (leaders), they will counter threaten each other.”

“But at the end, both sides have enough bargaining chips in their hands to prevent the worst case scenario.”

MARCO SUN, CHIEF FINANCIAL MARKET ANALYST, MUFG BANK (CHINA), SHANGHAI:

“The U.S.-China meeting has calmed financial markets, with the agreement signalling that future cooperation remains open for discussion.

“It is anticipated that the meeting will pave the way for deeper trade and economic discussions between the two countries. Long-term relations and industrial developments are expected to be reshaped through mutual compromise.”

EMANUEL DATT, PRINCIPAL, DATT CAPITAL, MELBOURNE:

“Now there seems to be a trade agreement, I expect there to be broad equity market upside across sectors – the strongest likely to be high beta stocks such as technology and biotech – as well as conventional sectors such as logistics.

“The weakest equity sectors should be gold and rare earth equities.”

TARECK HORCHANI, HEAD OF DEALING, PRIME BROKERAGE, MAYBANK SECURITIES, SINGAPORE:

“The U.S.–China trade truce is likely to be greeted as a relief rally rather than a structural reset.

“When such truces occur, one of the first areas both sides highlight is agriculture, a politically sensitive sector in the United States, where farmers form a key constituency.

“Overall, this looks like a tactical pause rather than a strategic breakthrough, with underlying tensions in technology, supply chains and rare earths still unresolved.”

DICKIE WONG, HEAD OF RESEARCH, KINGSTON SECURITIES, HONG KONG:

“I don’t see there’s any major optimistic surprise at this point, both for the markets and the U.S.-China talks.

“It’s still that same question – after the meeting ends, does it really mean the two countries will have a joint statement, and then the U.S. will roll back all tariffs on China, drop tech curbs, and China will export rare earths again? I don’t see any possibility.

“The markets have already priced in much of the positives and there could be an ‘anti-climax’ development.”

MUHAMMAD SAIFUDDIN BIN SAPUAN, ECONOMIST, KENANGA INVESTMENT BANK, KUALA LUMPUR:

“I think this is a tactical pause rather than a structural shift, as both likely aim to ease tensions. But the truce will help stabilise global sentiment and trade expectations in the short term, which offers relief for global demand and supply chains.

“Nevertheless, we still think that structural decoupling between the U.S. and China will continue to shape the long-term outlook.”

(Reporting by Yantoultra Ngui, Rae Wee and Gregor Hunter Stuart in Singapore, Jiaxing Li in Hong Kong, Scott Murdoch in Sydney; Compiled by Ankur Banerjee; Editing by Lincoln Feast and Clarence Fernandez)