US-China Trade Talks Signal De-escalation, But Breakthrough Unlikely

After weeks of speculation, it’s official: top U.S. and Chinese trade officials will meet this weekend in Geneva. But let’s not kid ourselves, this is more about starting a dialogue than sealing any major deal. U.S. Treasury Secretary Scott Bessent made it clear the meeting will focus on figuring out the actual topics of discussion. Meanwhile, China responded cautiously, reminding everyone that words mean little without matching actions, using a proverb that implies mistrust in American consistency.

Even with low expectations, markets gave a modest thumbs-up. U.S. futures held onto gains in Asian trading, and Hong Kong stocks saw a notable boost. China added to the momentum by suggesting rate cuts and opening more financial pathways for insurers to invest in the stock market. That said, investors are still craving the kind of fiscal stimulus that hasn’t materialized yet, so the overall reaction was more hopeful than euphoric.

All of this plays out just ahead of the U.S. Federal Reserve’s upcoming meeting. No policy changes are expected, but markets will be watching closely for any signs about how the Fed views job numbers and inflation. Last Friday’s strong labor data has already led markets to scale back bets on future rate cuts, reinforcing the idea that the Fed might stay cautious.

Elsewhere, geopolitical tensions flared as conflict between India and Pakistan escalated to levels not seen in over 20 years, nudging the Indian rupee lower. Asian currencies, after enjoying a recent upswing, took a slight step back. In Europe, it’s a quieter day economically, though investors are eyeing earnings from major healthcare firms like Fresenius and Novo Nordisk to gauge sector health and growth.

Source: Reuters