Asian markets struggle despite trade truce between Trump and Xi

Friday 31 October 2025 - 12:20

By: Dakir Madiha

Asian markets struggle despite trade truce between Trump and Xi

Asian stock markets faced mixed outcomes on Friday, highlighting investor skepticism over the limited scope of a recently announced trade truce between the United States and China. Concerns about slowing global economic growth overshadowed the diplomatic breakthrough.

Mixed performance across Asian indices

Hong Kong’s Hang Seng Index fell 0.9%, closing at 26,050 points, while the Shanghai Composite dropped 0.6% to 3,963 points. These declines marked the continuation of a challenging month for Chinese markets, which are poised for their first monthly loss since April.

By contrast, Japan’s Nikkei 225 surged 1.7%, reaching a record-breaking 52,201 points. This marked its strongest monthly rally in three decades, fueled by robust industrial production data and strong earnings reports from U.S. tech giants Amazon and Apple, revealed after Thursday’s market close.

China’s manufacturing slowdown persists

The Chinese manufacturing sector showed further signs of weakness, with the official Purchasing Managers’ Index (PMI) falling to 49.0 in October from 49.8 in September. This marked the seventh consecutive month of contraction, underlining the persistent economic challenges faced by the world’s second-largest economy despite easing trade tensions.

Investor concerns over tech spending

The trade truce failed to lift investor sentiment as concerns about surging tech sector expenses weighed heavily on global markets. Meta Platforms saw its shares plummet 11.3% after forecasting significantly higher capital expenditures for 2026. Similarly, Microsoft’s shares dipped 2.9% despite its earnings surpassing expectations, with investors wary of the company’s record $35 billion in first-quarter fiscal spending.

According to Brian Jacobsen, chief economist at Annex Wealth Management, “The results were decent, but decent isn’t enough given the high expectations. These outcomes felt more like minor gestures rather than a major breakthrough.”

Trade truce details and unresolved tensions

Following a 90-minute meeting, former U.S. President Donald Trump rated his discussion with Chinese President Xi Jinping a "12 out of 10." The agreement included plans to reduce tariffs on fentanyl-related goods from 20% to 10% and China’s pledge to lift export restrictions on rare earth materials while resuming soybean purchases. However, structural issues, including disputes over Taiwan and other contentious topics, remain unresolved, limiting the broader impact of the deal.