Asia: Equities rally after China-US framework on trade
[HONG KONG] Asian stocks rose on Wednesday as investors welcomed a China-US agreement to lower trade tensions that stoked hopes the economic superpowers will eventually reach a broader tariff deal.
After two days of high-profile, closely watched talks in London, the two sides said they had set up a framework to move towards a pact, following negotiations in Geneva last month that saw them slash tit-for-tat levies.
The news provided some much-needed relief to markets after US President Donald Trump accused Beijing of violating that deal. The latest round of talks followed a phone call between Trump and his Chinese counterpart Xi Jinping on Thursday.
As well as tariffs, a key issue in the discussions was China's export of earth minerals and magnets used in a range of things including smartphones and electric vehicle batteries, while Beijing was keen to see an easing of restrictions on its access to tech goods.
US Commerce Secretary Howard Lutnick said he was upbeat that concerns over rare earths 'will be resolved' eventually, as the agreement is implemented.
Xi and Trump must approve the framework first.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
'We're moving as quickly as we can,' US Trade Representative Jamieson Greer told reporters. 'We would very much like to find an agreement that makes sense for both countries,' he added.
'We feel positive about engaging with the Chinese.'
Speaking separately to reporters, China International Trade Representative Li Chenggang expressed hope that progress made in London would help to boost trust on both sides.
The deal, which was reached late on Tuesday, boosted Asian markets with Hong Kong and Shanghai among the best performers, while Tokyo, Sydney, Seoul, Wellington, Taipei and Manila were also up.
However, analysts said investors would be keen to get a closer look at the details of the agreement.
'The US-China trade circus wrapped with what can only be described as a diplomatic tautology,' said Stephen Innes at SPI Asset Management.
He called it 'a late-night announcement that both sides have 'agreed in principle on a framework to implement the Geneva consensus' - a consensus that was... already agreed upon weeks ago'.
And he warned that markets could run out of steam if nothing concrete came through.
'If the next headline doesn't come with something tangible, such as cargo ships loaded with rare earths or an actual rollback of tariffs, expect risk assets to start demanding more photo opportunities,' he wrote.
'Until then, this rally relies on faith.'
And Saxo chief investment strategist Charu Chanana said before the deal was announced that while there was some hope for the talks 'the era of easy wins - tariff pauses and minor concessions - is over'.
'What's left are deeper, more entrenched challenges: tech restrictions, rare earth supply chains, student visas, and national security-linked concerns. These are strategic disputes, unlikely to be resolved in a few rounds of meetings.'
Still, she did say that 'trade uncertainty has clearly faded since the peak chaos of early April', when Trump unleashed a tariff blitz that hammered worldwide stock and bond markets.
Tuesday's news also overshadowed the World Bank's slashing of its 2025 forecast for global economic growth to 2.3 per cent, from the 2.7 per cent predicted in January, citing trade tensions and policy uncertainty.
It also said the US economy would expand 1.4 per cent this year, half of its 2024 expansion. AFP
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
14 minutes ago
- Straits Times
Trump says Los Angeles ‘safe and sound' for two nights after protests
The protests had ignited over an escalation in efforts to apprehend migrants in the US illegally. PHOTO: AFP Trump says Los Angeles 'safe and sound' for two nights after protests WASHINGTON - Los Angeles 'was safe and sound for the last two nights', US President Donald Trump said on the morning of J une 12 , as he hailed troops for helping to restore order in the city after days of anti-deportation protests. 'Our great National Guard, with a little help from the Marines, put the LA Police in a position to effectively do their job,' Mr Trump said on Truth Social, adding that without the military the city 'would be a crime scene like we haven't seen in years'. The mostly peaceful protests ignited last week over a sudden escalation in efforts to apprehend migrants in the country illegally. But there were also pockets of violence, including the burning of self-driving taxis and hurling stones at police. Mr Trump deployed several thousand National Guard troops and some 700 active-duty Marines over the objections of Democratic California governor Gavin Newsom, the first such action by a US president in decades. In his post, Mr Trump said Mr Newsom 'had totally lost control of the situation'. 'He should be saying THANK YOU for saving his a**, instead of trying to justify his mistakes and incompetence!!!' the president added. Similar protests also ignited in other cities across the United States, as California prepared on June 12 for a legal showdown of Mr Trump's deployment of the military. A second night of curfew was in place as city leaders tried to get a handle on the after-dark vandalism and looting that scarred a few city blocks in the 1,300 sq km metropolis. AFP Join ST's Telegram channel and get the latest breaking news delivered to you.
Business Times
34 minutes ago
- Business Times
Myanmar recovery dented by devastating quake, World Bank says
[NAYPYIDAW] Myanmar's economy is headed for its worst performance since the pandemic as the strife-torn country reels from the impact of a devastating earthquake in March that's estimated to have caused US$11 billion in damage, according to the World Bank. The 7.7 magnitude earthquake on Mar 28 affected more than 17 million people and wrecked widespread damages to residential buildings, public infrastructure and heritage sites in areas accounting for about one-third of Myanmar's gross domestic product. The impact of the quake still continues to disrupt lives and livelihood, 'exacerbating the already very difficult conditions in the affected areas,' the bank said in a report Thursday. The dent to economic output due to the earthquake will be equivalent to about 4 per cent of Myanmar's GDP in the fiscal year ending March 2026, the development bank estimated. The economy will contract 2.5 per cent in 2025-2026 before rebounding to a growth of 3 per cent the following year due to rebuilding efforts and the low base, it said. Prior to the earthquake, which left 3,800 people dead and 207,000 people displaced in townships including Mandalay and Naypyidaw, the World Bank had forecast a 2 per cent expansion this year. The worst-affected regions are expected to lose about a third of their production between April and September, it said. 'The economic aftershocks of the earthquake have struck on the back of ongoing challenges from conflict,' the World Bank said. The nation has been struggling with a civil war, stinging inflation and a shortage of US dollars since the military seized power in 2021 February. A raging conflict between rebel groups fighting for independence and the regime has displaced about 3.5 million people, the lender said, citing United Nations estimates. Inflation, which quickened to 34.1 per cent in the year to April, may remain high at around 31 per cent in the current fiscal year due to supply-chain disruptions associated with the quake and conflict-related logistics challenges. The poverty rate may climb 2.8 percentage points from an already high ratio of 31 per cent last year, according to the World Bank. Myanmar's budget deficit is seen widening to 6.9 per cent by the end of March next year, up from 5.1 per cent a year earlier with much of the deficit funding coming from the central bank, the report said. 'The earthquake caused significant loss of life and displacement, while exacerbating already difficult economic conditions, further testing the resilience of Myanmar's people' Melinda Good, World Bank Division Director for Thailand and Myanmar said in a statement. 'Recovery efforts are essential to help the most vulnerable populations.' BLOOMBERG
Business Times
34 minutes ago
- Business Times
Here's why Trump's tariffs won't work
[SINGAPORE] US President Donald Trump's tariffs have been widely panned as reckless, short-sighted and self-defeating. Economists called them 'taxes on Americans' rather than the rest of the world – penguin-majority islands included. Many blame those tariffs – imposed under the banner of 'America First' – for worsening the global trade slowdown. But zoom out, and Trump's actions are not so radical. Throughout history, many leaders have believed that security lies in self-sufficiency. From imperial China to Nazi Germany, ancient Rome to modern-day Brexit Britain, the instinct to turn inward runs deep. The logic: Tighten borders, produce everything at home and cut reliance on other nations to shield against risk. Two new books argue that this instinct, while understandable, is exactly what has led great powers to fall. It is not narrow self-interest that builds empires – it is exchange. Civilisations rise not by going it alone, but by embracing openness – even when it is messy or uncertain. The two timely books are Exile Economics: What Happens If Globalisation Fails by Ben Chu, and Peak Human: What We Can Learn From History's Greatest Civilizations by Johan Norberg. Both were published in May 2025 – shortly after Trump waved around a cardboard chart that sent shockwaves through global markets – though their writing predates the latest phase of his trade war. Chu is the British economics editor at BBC Newsnight; Norberg is a Swedish historian and bestselling author. They have observed the same global trends from very different angles – Chu from the world of policy and supply chains, Norberg through the long arc of history. Yet they arrive at a shared conclusion, which serves as a sobering warning about the deepening divide between China and the US, and the risks it poses to global stability and prosperity. A NEWSLETTER FOR YOU Friday, 2 pm Lifestyle Our picks of the latest dining, travel and leisure options to treat yourself. Sign Up Sign Up When empires close themselves off If you had to pick just one of the two books, I recommend Norberg's Peak Human. His grasp of history is sweeping, but he also knows how to keep things light and entertaining – which helps when you are sprinting through centuries of civilisation in a single chapter. The book explores 'golden ages' such as ancient Athens, Song Dynasty China and Renaissance Italy – moments when humanity flourished economically, intellectually and artistically. What these societies had in common, Norberg argues, was openness. They welcomed outsiders, embraced trade and encouraged innovation. But when they turned inward, they stagnated. Peak Human by Johan Norberg is an entertaining guide through the golden ages of human history. PHOTO: ATLANTIC BOOKS In Song China, trade and cultural exchange drove technologies that Europe would not see for centuries. But when paranoia and conservatism took hold, progress ground to a halt. Similarly, Abbasid Baghdad was once a hub of Islamic learning and diversity. That golden era ended with religious orthodoxy and invasions. If Norberg looks to the past to explain why empires thrive or collapse, Chu turns his gaze to the present. He coins the term 'exile economics' to describe a world turning its back on global trade in favour of national self-reliance. The appeal is obvious – who does not want independence, security and control? But the reality, he argues, is that autonomy comes with steep costs. Want food independence? Expect higher prices and less variety. Want to make your own microchips? That is a decades-long, cross-border supply chain you will need to build from scratch. And good luck finding anyone else eager to handle rare earth metals like China does. Ben Chu's Exile Economics explores anti-globalisation sentiment across economies. PHOTO: BASIC BOOKS Chu offers real-world examples to show just how entangled the world is. Global trade is not just about cheap goods, it is about shared resilience and rising living standards. Break that in the name of sovereignty, and you often get more fragility, not less. He even points to history: Nazi Germany's push for self-sufficiency helped fuel its aggressive expansion. Resource nationalism, in other words, is not just inefficient. It is dangerous. Lessons for today Both Peak Human and Exile Economics warn that today's anti-globalisation sentiment threatens to undo decades of progress. It is not trade, immigration or openness that causes modern problems – it is poor governance and weak systems. The solution is not retreat, but reform. Both authors highlight how interdependence, while complex, is more resilient than we give it credit for. Chu notes how supply chains adapted swiftly to pandemic shocks. Norberg reminds us that empires rarely fall because of enemies abroad – they collapse when they close in on themselves. And the effects are already visible. In response to Trump's tariffs, China did not panic – it pivoted. Supermarkets swapped out US beef for cheaper Australian imports, thanks to the China-Australia free trade agreement. Meanwhile, US consumers are expected to pay more for beef – a tariff own-goal. In April 2025, research and consulting firm Ipsos released a poll which found that the US' reputation had sharply declined in 26 out of 29 countries over the previous six months. For the first time in the survey's decade-long history, more respondents viewed China as a more positive influence on world affairs than the US. What these books make clear is that prosperity is fragile. The systems that brought billions out of poverty and spurred innovation did not emerge by accident. They were built on trust, trade and cooperation. Undoing them is easy. Rebuilding them is not. Exile Economics: What Happens If Globalisation Fails by Ben Chu and Peak Human: What We Can Learn From History's Greatest Civilizations by Johan Norberg are available at Kinokuniya
