Asian markets delivered a mixed performance on Friday as investors analyzed a tentative trade truce between the United States and China following a high-stakes meeting between President Donald Trump and his counterpart, Xi Jinping.
The de-escalation in the dispute over rare earth elements provided a strong tailwind for Japanese stocks, which surged to new records.
However, fresh data showing an unexpected contraction in Chinese manufacturing activity kept a lid on gains in Hong Kong and the mainland, creating a divergent picture across the region.
Japan leads gains as markets digest US-China truce
The primary driver of positive sentiment was the outcome of the Trump-Xi summit in South Korea, where the leaders reached a deal of sorts to avoid a full-blown trade war.
Japan’s Nikkei 225 rallied over 1% to hit a fresh record, while the broader Topix index also scaled a new peak, adding 0.79%.
The relief rally extended to other parts of the region, with South Korea’s Kospi adding 0.22% and Australia’s S&P/ASX 200 starting the day 0.45% higher.
However, market strategists cautioned that the truce might be temporary.
“Both sides appear to be maintaining leverage for future negotiations by keeping these measures as bargaining chips,” said JPMorgan Asset Management’s global market strategist, Chaoping Zhu.
China’s factory activity shrinks, weighing on sentiment
The optimism was not shared in Chinese markets, which were weighed down by disappointing economic data.
An official survey released Friday showed that China’s manufacturing activity contracted more than expected in October, hitting its lowest level since May.
The official manufacturing purchasing managers’ index (PMI) fell to 49, according to the National Bureau of Statistics, missing the 49.6 forecast by economists in a Reuters poll. A reading below 50 indicates contraction.
The data highlights the persistent pressure on Chinese factories from US tariffs and weakening global demand. In response, Hong Kong’s Hang Seng Index slid 0.33%, while mainland China’s CSI 300 remained flat.
Panasonic shares tumble on weakened profit outlook
In corporate news, shares of Panasonic Holdings plummeted over 8% after the Japanese electronics giant lowered its full-year operating profit forecast by 13.5%.
The company cited a decline in expected profit from its crucial energy unit, which is a key supplier of batteries to Tesla and other major automakers.
The sharp downward revision spooked investors and made Panasonic a notable outlier in an otherwise buoyant Japanese market.
Indian markets poised for a mild rebound
In India, early indicators suggested a mildly positive start for the local stock market after a session of steep losses on Thursday.
The trends on Gift Nifty, which was trading around the 26,058 level, pointed to the Nifty 50 opening slightly higher.
On Thursday, the Sensex had dropped 592 points to close at 84,404.46, while the Nifty 50 settled 176 points lower at 25,877.85, with the benchmark index closing below the key 25,900 level.
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