Asian markets mixed as China’s Xi arrives for US talks

Asian markets experienced a mixed day on Thursday as traders prepared for a high-stakes summit between US President Donald Trump and Chinese leader Xi Jinping. The event focused on AI, trade, and the Middle East war. China's arrival in Washington coincided with US Treasury announcing an extension of the trade truce by two months, keeping hopes of a lasting agreement alive.

However, the absence of Chinese CEOs in Xi's delegation dampened business deal hopes, while top US tech bosses attended the pre-summit banquet. Pre-summit discussions also centered on establishing a communication channel for AI concerns, with experts warning of the technology's potential risks. Hong Kong, Shanghai, and Taipei experienced losses, while Japan's Nikkei rose 1.6% after reopening following a three-day break.

The Nikkei's gains were driven by a 30-year high in 10-year JGB yields, which rose to 3.055% following a jump in US bond yields. The US Federal Reserve had raised borrowing costs the previous week, providing relief to traders concerned about policymakers' response to inflation. The Iran war was also on the agenda as Trump confirmed that Beijing was providing intelligence to Tehran, despite earlier downplaying the reports.

Oil prices cooled off after surging sharply as world leaders at the UN General Assembly showed little progress in ending the Middle East turmoil. Brent crude declined 1% in early Asian trade after soaring more than 3% the prior day, as hopes for a deal to facilitate Gulf oil and gas flow through the Strait of Hormuz faded.