Asia-Pacific markets traded with mixed sentiment as U.S. President Donald Trump arrived in Beijing for critical talks with Chinese President Xi Jinping, anticipated to focus on trade and export controls. While Japan and mainland China saw declines, South Korea’s Kospi and Kosdaq rose, with Samsung shares rebounding after a significant labor dispute. Goldman Sachs foresees the summit as a potential tactical catalyst for Chinese assets, despite not expecting a full reset of U.S.-China relations.
Asia-Pacific equity markets experienced a varied trading day on Thursday as investors closely monitored the arrival of U.S. President Donald Trump in Beijing. The much-anticipated summit with Chinese President Xi Jinping is expected to shape the future trajectory of U.S.-China relations and global trade dynamics.
President Trump touched down in the Chinese capital on Wednesday for the high-profile discussions, accompanied by a delegation of prominent American business leaders, including Tesla CEO Elon Musk and Nvidia chief Jensen Huang.
On the trading floors, Japan's Nikkei 225 saw a decline of 0.98% to 62,654.05, with the broader Topix index also falling 1.03% to 3,879.27. Conversely, South Korea's Kospi advanced by 1.75% to 7,981.41, and its small-cap Kosdaq index climbed 1.2% to 1,191.09.
Samsung shares notably surged by as much as 5%, reaching a fresh all-time high. This recovery followed a significant $66 billion market value drop earlier in the week, triggered by a labor dispute that threatened one of the largest strikes in the company's history. The dispute involved a union's threat of an 18-day walkout from May 21, potentially involving over 41,000 workers.
South Korea's finance minister, Koo Yun-cheol, issued a warning on Thursday that a prolonged Samsung strike could pose a substantial risk to the nation's economic growth, export performance, and financial markets.
Elsewhere in the region, Australia's S&P/ASX 200 gained 0.12% to close at 8,640.7. Hong Kong's Hang Seng index remained largely flat during the final hour of trading, while mainland China's CSI 300 experienced a 1.68% decline, settling at 4,914.60.
Analysts at Goldman Sachs offered their insights, predicting that the Trump-Xi summit would concentrate specifically on trade and export controls, encompassing issues like tariffs, restrictions on rare earth minerals, and semiconductors. They do not anticipate a broad overhaul of bilateral ties. Goldman Sachs suggested that China might agree to boost its purchases of U.S. agricultural products, energy, and aircraft in exchange for avoiding additional tariff increases.
In a note released Wednesday, Goldman's analysts stated, "While unlikely to be a game changer for US-China relations, we think the meeting could act as a tactical catalyst for strength in the Chinese yuan and Chinese equities." The investment bank maintained a favorable outlook on Chinese assets, citing the country's export competitiveness and an "undervalued" currency, reiterating an overweight recommendation on Chinese equities, particularly mainland A-shares over Hong Kong-listed H-shares.
Meanwhile, in the U.S., futures showed minor fluctuations. S&P futures and Nasdaq 100 futures edged up 0.1% and 0.4% respectively, while futures tied to the Dow Jones Industrial Average rose by nearly 0.3%, or 111 points.
Overnight trading on Wall Street saw the S&P 500 climb to a new all-time high, fueled by strong enthusiasm for technology stocks, which overshadowed another report of hotter-than-expected inflation. The S&P 500 gained 0.58% to 7,444.25, and the tech-heavy Nasdaq Composite jumped 1.2% to close at 26,402.34, with both indices achieving fresh intraday and closing records. In contrast, the Dow Jones Industrial Average shed 67.36 points, or 0.14%, ending the session at 49,693.20.
