Hopes for a US-China trade deal pushed Chinese stocks to their highest level in more than 10 years on Monday, while markets in South Korea and Taiwan hit all-time highs.
Investors’ risk appetite was bolstered by remarks from top officials from the US and China, who outlined a framework agreement ahead of a key leaders’ meeting later this week.
But Indonesia was the “odd man out,” with shares falling sharply and on track for their worst session in nearly seven months.
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South Korea and Taiwan stocks spearheaded gains in the region and notched fresh highs, rising about 2.6% and 2.4%, respectively, while the Nikkei in Japan was also up 2.46%.
In China, the benchmark Shanghai Composite Index ended 1.2% higher, slightly off the psychologically key 4,000 mark, while the blue-chip CSI300 Index was up 1.2%. Hong Kong’s benchmark Hang Seng Index gained 1.1%.
Top Chinese and US economic officials on Sunday hashed out the framework of a trade deal for US President Donald Trump and Chinese President Xi Jinping to review later this week.
It would pause steeper American tariffs and Chinese rare-earth export controls, US officials said.
Ahead of his meeting with Chinese President Xi Jinping on Thursday (October 30) in South Korea, US President Donald Trump said the US and China are set to “come away with” a trade deal.
Even before he flew to Asia, Trump was saying he could make concessions to calm trade relations with China.
A trade deal between the world’s two largest economies would pause steeper American tariffs and Chinese rare earths export controls.
“Encouraging signals from these discussions could pave the way for a favourable outcome at the upcoming meeting between Trump and Xi on October 30,” Lloyd Chan, a senior currency analyst at MUFG, said.
“In this context, positive momentum in Asian currencies and stock markets may well continue in the near term,” Chan added.
Also lifting market sentiment, a softer-than-expected US inflation report on Friday cemented expectations that the Federal Reserve would cut interest rates by a quarter percentage point at its meeting on Wednesday.
“Investors have been sitting on the sidelines watching trade talks for a while, and the weekend developments were a pretty positive surprise. It will give markets a boost,” Kenny Ng, a securities strategist at Everbright Securities International, said.
Ng said market participants still need to determine if the final terms of the deal mirror what was outlined over the weekend or contain unexpected elements.
Trump and Xi are due to meet on Thursday on the sidelines of the Asia-Pacific Economic Cooperation summit in Gyeongju, South Korea, to sign off.
But investors remain wary
In China, artificial intelligence shares led gains onshore, up 2.4%, while tech firms in Hong Kong were up 1.8%.
China’s yuan also jumped to a more than one-month high against the US dollar on Monday and government bond futures also ended higher.
Still, market participants remained cautious about how long the current thaw in tensions might last.
“Both sides are still reliant on one another, and both are buying time to reduce this reliance,” said Ting Lu, chief China economist at Nomura. “We view this cycle of tension, escalation and truce as the new normal for US-China relations.”
“We are not surprised to see the truce again, and we won’t be surprised to see another escalation in the next couple of months,” Lu said.
Trading sentiment was also helped by a report on Chinese industrial profits, which grew at their fastest pace in nearly two years in September. That marked a second straight month of gains, signalling that measures designed to curb overcapacity and rebalance the economy could be gaining traction.
Shares of China’s non-ferrous metals companies rose as much as 3% as the benchmark three-month copper price rose to its highest point since May 2024 on Monday. The CSI Rare Earth Index was up 2.7%.
Among other markets, Thailand shares jumped as much as 2.4% to hit their highest in almost nine months, after data showed customs-cleared exports rose 19.0% in September from a year earlier. The benchmark was last up 1.3%.
In Sydney, the ASX edged up by 0.37%, while the Sensex in Mumbai, India, was also up by 0.67%
Jakarta shares slump
Meanwhile, shares in Jakarta fell 3.8% in broad-based selling and were on track for their worst session since April 8.
The fall came after an MSCI consultation paper raised concern about a potential re-weighting of local shares, which some analysts said could make it harder for Indonesian stocks to get into the MSCI Index.
Top banks in Indonesia, including Bank Rakyat, Bank Mandiri and Bank Syriah, were down between 0.4% and 1.1%.
Indonesian government bonds have become less attractive to foreign investors as the yield premium over US Treasuries narrowed to around 199 basis points, below the 220-basis-point level seen as appealing, following Bank Indonesia’s rate cuts and expectations of a Fed easing, Maybank analysts said.
Most Asian currencies rose, buoyed by hopes of a China-US trade deal. The South Korean won and the Taiwan dollar both gained 0.4%.
The Singapore dollar and the Philippine peso were largely flat, while the Malaysian ringgit edged 0.2% higher. The Indonesian rupiah lost 0.2%.
Elsewhere, Argentina’s bonds and stocks are expected to rally after President Javier Milei’s party scored a decisive win in midterm elections.
- Reuters with additional input and editing by Jim Pollard
NOTE: Additional text and a link were added to this report on October 27, 2025.
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