Asian markets were mixed on Thursday, with investors adopting a cautious “wait-and-see” approach as two major global events took center stage: a high-stakes meeting between the leaders of the US and China, and the fallout from the US Federal Reserve’s latest policy guidance.
While the Fed delivered an expected rate cut, hawkish comments from Chair Jerome Powell tempered enthusiasm, leading to a subdued and divergent performance across the region’s major indexes.
Markets on edge as Trump-Xi summit begins
In China and Hong Kong, markets were largely flat as the first in-person meeting between US President Donald Trump and Chinese President Xi Jinping of Trump’s second term got underway.
Investors held back from making significant moves, awaiting any signals on the future of trade relations between the two economic superpowers.
Hong Kong’s Hang Seng index managed a modest gain of 0.39%, while mainland China’s CSI 300 hovered just above the flatline.
Powell’s hawkish tone ripples across the region
The other major influence on market sentiment was the US Federal Reserve.
The central bank cut its benchmark interest rate by 25 basis points to a range of 3.75%-4.00%, a move that was widely anticipated.
However, Fed Chair Jerome Powell warned that another rate cut in December was far from a “foregone conclusion,” dashing investor hopes for a more dovish stance.
Powell’s caution rippled through US markets overnight, where the Dow Jones Industrial Average erased earlier gains to close down 0.2%.
That cautious sentiment carried over into Asia, with Japan’s Nikkei 225 dipping slightly and Australia’s S&P/ASX 200 starting the day down 0.18%.
South Korea rallies on US investment deal details
Bucking the regional trend, South Korean markets opened higher on specific, positive local news. The benchmark Kospi index gained 0.49%, led by auto and shipbuilding stocks.
The rally followed local media reports that a senior policy advisor, Kim Yong-beom, had released new details of a trade deal with Washington.
According to the reports, South Korea will invest $200 billion in the US with a $20 billion annual cap, while another $150 billion will be directed toward shipbuilding cooperation.
The news, however, did not lift all boats, as the small-cap Kosdaq index fell 0.92%.
Indian markets poised for a positive start
In India, markets were poised to open higher, focusing more on the confirmed Fed rate cut and optimism surrounding the Trump-Xi meeting.
Early trends from Gift Nifty futures, which were trading at 26,188, suggested the Nifty 50 would open above its previous close.
Both the Sensex and Nifty indices gained nearly 0.5% in the prior session and are now trading less than 1% below their all-time highs set in September 2024.
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