Morning wrap (27.10.2025)

Asian-Pacific stocks edge higher amid improved sentiment over China trade. U.S. futures rise to record levels. Japan’s JP225 index gains 0.70%, breaking above 50,000 points for the first time.

Positive signals from Washington and Beijing have boosted expectations for a breakthrough after two days of talks. Trump and Xi are expected to meet later this week to finalize an agreement — the third in nine months. Both U.S. futures and Asian markets advanced on the headlines.

Trump said that a final deal on TikTok could be signed this week, mentioning Xi’s preliminary approval. During his visit to Malaysia, additional trade and rare earth agreements were also signed.

Chinese Premier Li told his Australian counterpart Albanese that Beijing is ready for a “more stable, strategic partnership,” supporting the outlook for Australian commodities and investment.

U.S. Treasury Secretary Scott Bessent said that the talks with China were productive and that an agreement could be signed Thursday in South Korea. He pointed to the resumption of large Chinese purchases of U.S. soybeans and a one-year delay in expanding export licenses for rare earth metals. He added that the threat of 100% tariffs has been “taken off the table.”

China’s industrial profits rose 21.6% y/y in September (after +20.4% in August) and are up 3.2% YTD, marking the best result since August 2024. Beijing’s measures to curb excessive price competition appear to be improving margins.

The Australian and New Zealand dollars strengthened slightly as China-linked currencies. The People’s Bank of China set the yuan’s reference rate at its strongest level in over a year, adding tailwinds to regional risk sentiment.

Japan’s services PPI accelerated to +3.0% y/y (from 2.7% previously), confirming persistent cost pressures in the services sector.

In Argentina, President Javier Milei’s party scored a decisive victory in by-elections, strengthening his control over Congress. Combined with a $20 billion U.S. support package, the result is viewed as a positive catalyst for Argentine assets.

Trump announced that he will not meet with Prime Minister Carney and signaled an additional 10% tariff “on top of current levels,” citing a dispute over an advertisement related to “Reagan tariffs.” Markets reacted indifferently due to the lack of concrete details.