Trump–Xi Meeting: Markets Poised for a Defining Trade Breakthrough

Markets brace for a pivotal Asian market trading session, with US President Trump and Chinese President Xi meeting in South Korea. Trump’s previous and current terms have strained US-Sino relations, setting the stage for a potentially historic trade deal.

China’s economy slowed to 4.8% growth in the third quarter, down from 5.2% in the second quarter. US tariffs impacted external demand, company margins, job cuts, falling wages, and waning domestic consumption.

Despite hefty US tariffs on Chinese goods, Mainland China and Hong Kong equity markets have posted strong gains in 2025. The Hang Seng Index has soared 31.92% year-to-date (YTD), while the CSI 300 and the Shanghai Composite Index have rallied 20.66% and 19.83%, respectively. For context, the Nasdaq Composite Index has jumped 24.07% YTD.

The outcome of today’s talks could trigger a breakout or derail Mainland China’s bullish momentum.

President Trump and President Xi: Key Talking Points

Economists will consider US President Trump’s Asian visit successful to date. Trump signed a rare earths deal with Japan, with Japan and South Korea pledging sizeable US investments to lower tariffs. South Korea also agreed to acquire US oil and gas to improve trade terms. However, a trade deal with China could be the jewel in the crown.

Key talking points in today’s trade talks could include:

• Tariffs on fentanyl products.
• Nvidia and Blackwell chips.
• Soybean imports.
• Rare earth export restrictions.
• Taiwan.
• Russia.

Ahead of today’s meeting, Trump has already suggested lower fentanyl-linked tariffs and a discussion on Nvidia’s Blackwell chip. China has also paved the way for a favorable outcome to talks, reportedly placing a sizeable soybean order. According to the Kobeissi Letter:

“China purchases 180,000 tons of US soybeans, in their first order in months, as show of good faith ahead of tomorrow’s meeting between President Trump and President Xi.”

Trump will likely want a binding commitment on soybean purchases and the removal of rare earth export restrictions to agree to tariff adjustments. The US President may also give China access to Nvidia’s Blackwell chips.

There has been plenty of speculation about the timing of today’s meeting. According to CN Wire, talks have begun, potentially lasting three to four hours.

Global Market Moves Underscore Significance of Trump-Xi Meeting

Global markets have seen significant moves in anticipation of today’s talks and Trump’s hints at potential US tariff and policy commitments. Gold has tumbled 4.04% in the current week, following a 3.27% drop in the week ending October 24. Meanwhile, the CSI 300 and the Shanghai Composite Index have risen 1.66% and 1.54%, respectively, reaching 2025 highs. However, Nvidia has led the way, soaring 11.16% this week.

Brian Tycangco, editor at Stansberry Research, commented on today’s talks, stating:

“If we end up with 25-30% tariffs on China and 10% tariffs on US after Trump-Xi meets this week, consider it a big win for the markets. A lot rests on fentanyl, rare earths, soybeans, chips, and SCS/Taiwan.”

Pre-Meeting Moves Boost Optimism About a Deal

Crucially, Beijing and Washington have avoided flexing muscles ahead of the meeting. The US President has stated multiple times that the Xi meeting will be great. Meanwhile, China’s soybean order demonstrates a willingness to finalize a deal.

Tycangco commented on the soybean order and a marked shift in tone before the talks, stating:

“This gesture of goodwill ahead of trade talks is the kind of diplomacy we need. Not the chest-thumping, sword-wielding, always on the offensive approach that erodes trust. It’s a positive sign that we might just see something done on trade and US-China relations.”

Last weekend’s high-level trade meeting involving US Treasury Secretary Scott Bessent and China’s chief trade negotiator Li Chenggang laid the foundations for Trump’s meeting with President Xi. Beijing and Washington reached a framework for a trade agreement, including:

• Withdrawal of an additional 100% US tariff threat.
• A 1-year delay on the implementation of export controls on rare earths to the US.
• China to resume soybean imports.
• US-China trade truce to be extended, set to end on November 10.
• Section 301 fees.
• Fentanyl-related measures and anti-drug cooperation.
• TikTok deal ironed out, with agreement for US investors to hold a majority stake and ByteDance retaining less than 20%.

Mainland Equities: Trump and Xi Talks in Focus

As trade discussions got underway, Mainland China’s equity markets reflected investor caution despite the market optimism. The CSI 300 and the Shanghai Composite Index fell 0.29% and 0.26%, respectively, in morning trading on Thursday, October 30.

Nevertheless, the CSI 300 hovered around its January 2022 high.

Meanwhile, the Shanghai Composite Index traded around its 2015 high.

Lower tariffs on Chinese goods and access to US chips could pave the way for the Mainland equity markets to target their all-time highs.

Given Beijing and Washington’s pre-meeting positioning, a favorable trade deal is likely, potentially delivering a bullish end to 2025.

However, downside risks persist as stalled talks could trigger a flight to safety, given that a full-blown trade war could have a significant impact on the global economy.

Outlook

While markets await updates from Trump’s meeting with President Xi, Beijing remains another focal point. A trade deal, combined with policy measures from Beijing, targeting domestic consumption, could reboot the economy.

Risk-on sentiment could drive demand for Mainland China-listed stocks. While the outlook is bullish, near-term trends will hinge on the outcome of talks and Beijing’s policy support.

Discover strategies to navigate this week’s market trends here.