U.S. and China finalize key trade deal amidst market highs

In the past few days, U.S. Treasury Secretary Scott Bessent announced that a trade deal with China is solidifying, emphasizing positive developments in the negotiations. As a result, stock markets soared, with the Nasdaq and S&P 500 reaching record highs, largely fueled by the performance of major tech companies like Nvidia and Microsoft. Meanwhile, global equities remained mixed, with Japan outperforming and markets in Indonesia and Malaysia closed due to the Islamic New Year. The trade discussions come in the backdrop of various regulatory adjustments from China, including the approval of export applications for controlled items, reflecting a willingness to stabilize relations with the U.S. These negotiations have also drawn attention to the industrial sector within China, which is facing challenges as evidenced by a reported 9.1% year-over-year decline in industrial profits for May. In light of these economic fluctuations, the People's Bank of China aims to implement a moderate monetary policy to bolster domestic consumption and stimulate economic growth, particularly as domestic demand remains insufficient. Officials are keen to coordinate fiscal and monetary policies to sustain reasonable pricing and economic growth amid ongoing global market changes. Market reactions have been complex, with companies like Xiaomi seeing significant trading activity on the Hong Kong Stock Exchange, while concerns linger over the performance of heavyweights in various sectors such as banking, insurance, and telecom. As government agencies continue to introduce measures to stimulate consumption, experts speculate on the lasting impact of this trade deal for both nations and its repercussions on global economic stability.