Markets remain cautious yet cautiously optimistic ahead of the highly anticipated meeting between Donald Trump and Xi Jinping in Beijing, as investors and governments attempt to assess whether the world’s two largest economies can avoid a new phase of trade and geopolitical escalation.

The meeting is considered high-risk for global markets, not only because of trade and tariffs, but also due to the ongoing war in the Middle East, pressure on global supply chains, and growing tensions surrounding artificial intelligence technologies and semiconductors.

Trump arrived in Beijing accompanied by leading figures from the American technology sector, including Elon Musk and Jensen Huang, underlining how technology has become central to US-China negotiations.

Asian markets traded mixed. Japan’s Nikkei 225 edged up 0.27%, while the TOPIX fell 0.23%. In South Korea, the KOSPI rose 0.38%, with Samsung Electronics posting strong gains and reaching a new all-time high despite the threat of a prolonged strike that could become one of the largest labor actions in the company’s history.

Hong Kong’s market advanced 1.32%, while mainland China’s CSI 300 gained 0.27%, even as Shanghai stocks came under pressure. Investors remain cautious over the possibility of new restrictions on technology and semiconductor exports.

Australia’s S&P/ASX 200 slipped 0.16%.

Goldman Sachs believes the Trump–Xi meeting will focus mainly on trade and export controls, including tariffs, rare earth restrictions, and semiconductors, without leading to a broader reset in US-China relations.

“While we do not expect this meeting to become a game changer for US-China relations, we believe it could serve as a short-term catalyst for the Chinese yuan and Chinese equities,” Goldman analysts said in a note.

The investment bank maintained a positive stance on Chinese assets, arguing that the competitiveness of Chinese exports and what it described as an “undervalued” yuan create room for upside. Goldman reiterated its overweight recommendation on Chinese equities, particularly mainland China A-shares over Hong Kong H-shares.

According to Goldman Sachs, Beijing could increase purchases of American agricultural products, energy, and aircraft in exchange for avoiding new US tariffs.

On Wall Street, futures moved slightly higher, with contracts tied to the S&P 500 and Nasdaq Composite advancing as investors continue to bet on the momentum of technology and artificial intelligence. In the previous session, both indexes closed at new record highs despite stronger-than-expected US inflation data.

Energy markets also remain in focus. Brent Crude traded above $106 per barrel, while West Texas Intermediate remained above $101, as the crisis in the Middle East and disruption concerns around the Strait of Hormuz continue to raise fears over global oil and LNG supply.

Investors expect Trump to pressure Xi Jinping to use China’s influence over Iran in an effort to reduce tensions in the region and avoid another shock to global energy markets.

Despite the cautious optimism, sentiment remains fragile. Markets understand that even a positive outcome from Beijing is unlikely to immediately alter the strategic rivalry between the United States and China. However, a temporary easing of tensions around tariffs, technology, and trade could provide significant relief for equities, currencies, and global growth in the coming months.

Source: Brief