Trump in Japan as hopes grow for China trade deal

Aurelia End and Andrew Caballero-Reynolds Optimism grew Monday that Donald Trump and China's Xi Jinping will end their bruising trade war during talks this week, as the US president touched down in Tokyo on the latest leg of an Asian tour.

Trump said en route to close US ally Japan that he was hopeful of a deal when he sees Xi on Thursday, while also indicating he was willing to extend his trip in order to meet North Korean leader Kim Jong Un.

"I have a lot of respect for President Xi and we are going to I think... come away with a deal," Trump told reporters on Air Force One, adding that he aimed to go to China "in the earlier part" of 2026.

The optimism boosted stock markets, with Japan's Nikkei surpassing 50,000 points for the first time.

As dozens of people gathered at Haneda Airport to take photos, the presidential plane − also bearing Secretary of State Marco Rubio and Treasury Secretary Scott Bessent − landed at sunset.

Sporting a golden tie, Trump boarded a helicopter to take him into the bright lights of the Japanese metropolis in time for an evening audience with the emperor.

"A great man," Trump said afterwards. On Tuesday, Trump was expected to meet new conservative Prime Minister Sanae Takaichi and make a speech on the USS George Washington aircraft carrier, docked at the US naval base Yokosuka.

"I hear phenomenal things. Takaichi was a great ally and friend of Shinzo Abe, who was my friend," Trump said, referring to the assassinated former premier.

Trump's Asia trip, his first tour of the region since returning to office, kicked off in Malaysia on Sunday with a flurry of agreements on the sidelines of an Association of Southeast Asian Nations (ASEAN) summit.

He also moved to mend fences with Brazilian President Luiz Inacio Lula da Silva, but not with Canadian Prime Minister Mark Carney, ruling out a meeting any time soon.

"Canada has been ripping us off for a long time and they're not going to rip us off any more," Trump said.

The greatest prize for Trump − and for global markets − remains a China deal.

Trump is due to meet Xi on Thursday in South Korea for their first face-to-face talks since the 79-year-old Republican's return to the White House.

Before Trump's arrival in Malaysia, Bessent and China's Vice Premier He Lifeng held two days of trade talks, seeking an agreement to avoid additional 100 per cent tariffs due to come into effect on November 1.

Negotiators from Beijing and Washington have both confirmed a "framework" has been agreed.

"The two sides... reached a framework consensus on reciprocal solutions to current pressing economic and trade issues," China's Foreign Minister Wang Yi said, according to a state media readout of his Monday call with Rubio.

Earlier on Air Force One, Bessent said they had "a framework for President Trump (and) President Xi to decide".

On Friday, Takaichi announced in her first policy speech that Japan would be spending two per cent of gross domestic product on defence this fiscal year.

But Washington, which has around 60,000 military personnel in Japan, wants Tokyo to spend more, potentially matching the five per cent of GDP pledged by NATO members in June.

Most Japanese imports into the United States are subject to tariffs of 15 per cent, less painful than the 25 per cent first threatened.

However, Trump also wants Japan to import more American products like rice, soybeans and cars, including "hot" Ford F-150 pickup trucks.

Questions also surround Japan's commitment to invest $550 billion in the United States, as specified in their July trade deal.

"What I expect is that, since he (Trump) is someone who acts decisively, things might move in a positive direction for Japan," said Tokyo resident Sayaka Kamimoto, 45.

Trump is due in South Korea on Wednesday for the Asia-Pacific Economic Cooperation (APEC) summit, and will meet President Lee Jae Myung.

Trump has also fuelled speculation that he could hold face-to-face talks with North Korea's Kim while on the Korean peninsula.

Wall Street's main indexes notched record highs on Monday as expectations of a US-China trade deal fueled risk-taking at the start of a week dominated by Big Tech earnings and a likely Federal Reserve rate cut.

US President Donald Trump and China's Xi Jinping are set to meet on Thursday to decide on the framework for a deal to pause steeper American tariffs and Chinese rare earths export controls.

Wall Street's fear gauge, the VIX, hit a one-month low. Earlier this month, Trump's revival of the trade war had sent the volatility index to its highest level since the April rollout of his "Liberation Day" tariffs.

At 10:28 a.m. ET, the Dow Jones Industrial Average rose 238.57 points, or 0.51%, to 47,445.69, the S&P 500 gained 58.69 points, or 0.86%, to 6,850.38 and the Nasdaq Composite gained 324.40 points, or 1.40%, to 23,529.27.

The rate-sensitive Russell 2000 rose 1.2%. US listed shares of Chinese companies gained. Alibaba Group Holding, JD.com and PDD Holdings rose over 2% each. Baidu added 5%.

Rare earth miners fell with MP Materials, USA Rare Earth and NYSE-listed shares of Trilogy Metals down 5.6%, 11% and 15%, respectively.

Keurig Dr Pepper jumped 6.2% after lifting its annual sales forecast and raising about $7 billion to finance its purchase of Dutch coffee giant JDE Peet's.

The S&P's consumer discretionary index added 1.2%. Lululemon shares were up 2.8% after the company announced a partnership with NFL to launch an apparel collection.

Tech stocks added 1.4% with Intel and Super Micro Computer both rising more than 4%.

The Philadelphia SE Semiconductor index also hit a fresh record high.

US listed shares Of Argentine companies jumped after President Javier Milei's election victory.

YPF gained 35%, while Grupo Supervielle and Banco Macro rose more than 40% each. Banco BBVA Argentina rose 45% and Grupo Financiero Galicia advanced 42%.

Fed Chair Jerome Powell's comments on Wednesday will be carefully scrutinized for hints on a December cut amid a government shutdown that has blocked economic releases.

"The lack of official inflation data will be supportive of the rally in the near term because monetary policy could be operating with an increasingly blind spot heading into the new year," said Jordan Rizzuto, CIO at GammaRoad Capital Partners.

As the busiest week of this earnings season kicks off, more than 170 companies are expected to report and all eyes will be on Big Tech.

Meanwhile the US dollar weakened against the euro, Chinese yuan and Australian dollar on Monday as optimism over a possible US-China trade deal boosted risk appetite and reduced demand for the greenback.

Overall moves in the currency markets were relatively muted as traders also waited on several key central bank meetings this week. President Donald Trump said on Monday the United States and China were set to "come away" with a trade deal. Trump is expected to meet Chinese President Xi Jinping this week in South Korea.

"The market's kind of euphoric," said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, noting strong gains in global stock markets.

The markets are cheered by three main developments, Chandler said.

"It looks like the US and China moved away from the brink. The US struck foreign trade deals or frameworks with some East Asian countries, and Milei did better in Argentina," Chandler said.

Argentine President Javier Milei's party cruised to victory in midterm legislative elections as voters handed him a mandate to keep pushing through his overhaul of the economy.

The dollar index was last down 0.06% at 98.87, with the euro up 0.13% at $1.164.

Central banks may dominate market direction later this week, with the Federal Reserve and Bank of Canada expected to cut rates on Wednesday, while the European Central Bank and Bank of Japan on Thursday are likely to leave rates unchanged.

With a 25-basis-point Fed rate cut long priced in, markets will closely watch for any signs that the central bank may be preparing to wind down its quantitative tightening programme (QT).

The Chinese yuan was also boosted by the People's Bank of China setting the official yuan midpoint rate higher than expected. Prior to the market open, it set the official yuan midpoint rate at 7.0881 per dollar, the strongest since October 15, 2024, and above a Reuters estimate of 7.1146.

Agencies