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Asian shares saw a strong rally on Monday, with Japan’s Nikkei 225 surpassing the historic 50,000 mark for the first time. The surge came as optimism grew over potential trade agreements during President Donald Trump’s Asia tour. Investor sentiment was lifted by hopes of easing US-China trade tensions, robust corporate earnings, and declining inflation concerns, boosting markets across the region.President Trump’s visit to Malaysia for the Southeast Asian nations’ summit brought fresh enthusiasm, as he reportedly reached preliminary trade deals with Malaysia, Thailand, Cambodia, and Vietnam. Meanwhile, progress in US-China negotiations further strengthened investor confidence, as both nations moved closer to finalizing a trade deal that Trump and Chinese leader Xi Jinping are expected to discuss during a high-level meeting later in the week.
“This isn’t just photo-op diplomacy,” noted Stephen Innes of SPI Asset Management, commenting that officials from both Washington and Beijing have quietly developed a framework that could prevent further trade disruptions between the two largest economies in the world.After Malaysia, Trump is set to travel to Japan and then South Korea, where he is expected to meet Xi on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit. However, a report released by the APEC secretariat projected that economic growth across the Pacific Rim region would slow to 3 percent this year, down from 3.6 percent last year, due to ongoing trade restrictions and higher tariffs.In Japan, newly appointed Prime Minister Sanae Takaichi has enjoyed strong public approval for her market-friendly economic approach. The Nikkei 225 gained 2.1 percent to reach 50,329.08, marking record intraday highs. Takaichi, Japan’s first female prime minister, has pushed for increased defense spending, driving up shares of defense manufacturers such as Kawasaki Heavy Industries, which rose 8.7 percent, IHI Corp. which gained 2.6 percent, and Hitachi which advanced 2.7 percent.
Trump, who has frequently criticized Japan for limiting access to American car exports, previously imposed tariffs of up to 25 percent on Japanese imports, later reducing them to 15 percent. In response, Japan’s government is reportedly considering the purchase of Ford F-150 trucks for infrastructure inspection purposes, as a gesture of goodwill to improve trade relations.
South Korea’s Kospi index also hit a record high, climbing 2 percent to 4,018.73, as investors anticipated a possible trade deal with the United States. Similarly, Chinese markets performed strongly, with Hong Kong’s Hang Seng up 1 percent at 26,427.34, and the Shanghai Composite Index rising 1 percent to 3,991.35.
Other regional markets followed suit: Australia’s S&P/ASX 200 rose 0.3 percent to 9,047.40, Taiwan’s Taiex gained 2.1 percent, and India’s Sensex increased by 0.5 percent.On Wall Street, US stocks ended the previous week on a high note after new inflation data suggested that price increases were less severe than expected. This news was particularly welcome for lower- and middle-income households still grappling with high living costs, and it also raised hopes that the Federal Reserve might continue to cut interest rates to support the slowing job market.The Fed had already reduced interest rates last month for the first time this year, but officials remain cautious about further cuts since lower rates, while stimulating economic activity, can also exacerbate inflation. Meanwhile, stronger-than-expected corporate earnings in the United States have bolstered confidence in sustained economic growth.
In commodities trading early Monday, US benchmark crude oil rose by 15 cents to $61.65 per barrel, while Brent crude gained 12 cents to $65.32 per barrel. In currency markets, the US dollar strengthened to 153.15 yen from 152.85 yen, and the euro slipped slightly to $1.1622 from $1.1636.
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