Asian stocks rose at the open and the dollar strengthened as China and the US plan to hold talks, spurring optimism trade tensions between the world’s two largest economies will ease.

A gauge of regional equities gained 0.3%, while index futures for the S&P 500 rose almost 1% on news Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will meet with the Chinese government this week in Switzerland. A gauge of the dollar’s strength advanced 0.2%, snapping three days of declines. Gold dropped as much as 1.6% and Treasuries fell.

Meanwhile, China reduced its policy rate and lowered the amount of cash lenders must keep in reserve, as Beijing ramps up efforts to help an economy caught in a second trade war with the US.

The meeting will be first confirmed trade talks between the countries since President Donald Trump announced sweeping tariffs last month, led by punishing levies on China. Financial markets had gyrated on concerns Trump ratcheting up his global trade war by imposing the highest levies in a century – and Beijing retaliating – will push the global economy into a recession.

“The US-China headlines helped to stabilize sentiment,” said Christopher Wong, a foreign-exchange strategist at Oversea-Chinese Banking Corp. The announcement is “aiding the rebound in pro-cyclical currencies,” while safe haven proxies, including long positions in the yen, Swiss franc and gold are unwound, he said.

The planned talks may encourage investors eager to see a reduction in tariffs that risk crippling trade between the countries. Trump placed duties as high as 145% on many Chinese imports, and Beijing retaliated with import taxes of 125% on American goods. The moves prompted companies to withdraw guidance and threatened to drive up prices for manufacturing equipment as well as day-to-day items such as clothing and toys.

While sentiment improved after the announcement of talks, investors will keenly watch “how credible” the outcome is, said Billy Leung, senior investment strategist at Global X Management Aus Ltd.

“Markets have been burnt before,” Leung said. “Longer-term sentiment hinges on whether tariff rhetoric cools down from here.”

The S&P 500 closed down 0.8% Tuesday after Trump said he would prescribe tariff levels and concessions for partners looking to avoid higher duties, appearing to move away from the idea that he would engage in back-and-forth negotiations. That spurred gains in Treasuries, which also climbed after a solid $42 billion sale of 10-year bonds. 

In geopolitical news, India said it conducted targeted military strikes against Pakistan, an expected move after it pledged retaliation for a militant attack last month in Kashmir that killed 26 people. Pakistan said it shot down five Indian airplanes.

Investors are also focused on Wednesday’s rate decision by the Federal Reserve, with traders expecting policymakers to stay on hold.

While Trump has been ratcheting up pressure on the central bank to resume cutting rates, officials have mostly emphasized a need to wait and see how trade policies implemented last month affect the economy.

“If traders wish to believe that the Fed will come to the rescue of the world tomorrow and assuage the recent rise in policy uncertainty and political uncertainty with a signal of overt ‘dovishness’, they should think again,” said Thierry Wizman at Macquarie.

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.9% as of 10:09 a.m. Tokyo time

  • Hang Seng futures rose 1.3%

  • Nikkei 225 futures (OSE) rose 0.1%

  • Japan’s Topix was little changed

  • Australia’s S&P/ASX 200 was little changed

  • Euro Stoxx 50 futures rose 0.3%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2%

  • The euro fell 0.3% to $1.1339

  • The Japanese yen fell 0.4% to 142.95 per dollar

  • The offshore yuan was little changed at 7.2048 per dollar

Cryptocurrencies

  • Bitcoin rose 3% to $97,553.21

  • Ether rose 3.8% to $1,842.13

Bonds

  • The yield on 10-year Treasuries advanced two basis points to 4.31%

  • Australia’s 10-year yield declined five basis points to 4.28%

Commodities

  • West Texas Intermediate crude rose 0.7% to $59.53 a barrel

  • Spot gold fell 1.8% to $3,368.50 an ounce

This story was produced with the assistance of Bloomberg Automation.

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