A friendlier vibe out of Washington and Beijing gave stocks a lift. MSCI's Asia Pacific index advanced 0.7%, paced by tech, while South Korea and Taiwan - both seen as AI bellwethers - pushed higher. Mainland Chinese shares also gained. Stateside, futures pointed up, with S&P 500 contracts up 0.4% and Nasdaq 100 futures ahead 0.7%.
Energy prices did the market a favor. Brent slid 2.4% to roughly $101.40, clocking a fourth straight decline and putting it on course for the longest run of daily losses since June, taking a bite out of inflation fears. That helped Treasury futures, with the cash market not trading during Asian hours because of a holiday in Japan. Gold was a touch softer at about $4,370 an ounce.
In New York, talks brought together US and Chinese officials, headed by Treasury Secretary Scott Bessent alongside Chinese Vice Premier He Lifeng. Bessent said the two sides will launch an AI dialogue to build a shared view of goals and threats. Washington also characterized the discussions as "very successful."
Beyond AI, the two sides are seeking tariff reductions on US energy and farm shipments within a broader bid to lower hurdles on $30 billion of goods from each country, using a Board of Trade framework that got underway earlier this year. Since Donald Trump and Xi Jinping last met in May, AI has become a fresh point of friction.
Investors are already juggling the Iran war, stickier inflation worries, heavy AI spending and higher global bond yields. With few big data releases on deck, attention shifts to this week's Trump - Xi summit following a stretch when, for the first time since 2023, the Federal Reserve lifted rates, while the Bank of Japan increased borrowing costs via a narrowly divided decision. The 10 year Treasury yield ended Friday just under 5%, and expectations for more Fed tightening have pushed wagers toward higher yields in shorter maturities. Because of the Japan holiday, cash Treasuries trading is set to restart in London later Monday.
The yen firmed slightly to about 156.60 per dollar after dropping more than 2% last week. With Japan kicking off a three day holiday, thin liquidity kept traders alert, and reports that BOJ officials conducted a rate check on Friday stoked talk of potential support for the currency. Australian government debt slipped at the open, mirroring Friday's weakness in Treasuries.
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In Europe, futures on German bunds advanced after Chancellor Friedrich Merz pledged to remain in office even after his party posted its worst ever showing in a state vote.
"Don't expect too many fireworks, though, because the focus is likely to be an extension of the existing trade truce rather than anything groundbreaking," Josh Gilbert, eToro's lead Asia Pacific analyst, wrote. Commonwealth Bank of Australia's team led by Joseph Capurso said the summit will likely do little more than keep the relationship stable.
Meanwhile, a regional US commander said oil and LNG flows through the Strait of Hormuz reached a six month high over the past two weeks, crediting US naval protection and mine clearance efforts. "Clearly, momentum is building," said Admiral Brad Cooper, head of US Central Command, in a Saturday video message.
Bottom line: with data light and rates, oil and geopolitics doing the talking, headlines out of the summit could sway prices in the near term. Keep an eye on energy costs and the yen - they feed straight into the prices you see and the mood in the markets you invest in.
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