Volkswacht Bodensee - Asian markets rally after positive China-US trade talks

Investors have been on a rollercoaster ride since Donald Trump unveiled eye-watering tolls on trading partners on April 2, with the heftiest saved for Beijing, raising concerns of a trade war between the economic superpowers.

The US president eventually hiked the measures against China to 145 percent, which were met with retaliatory rates of 125 percent.

However, there have been signs of an easing of tensions and after two days of highly anticipated negotiations in Geneva, the two countries hailed progress towards ending the crisis.

US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer met Chinese Vice Premier He Lifeng and international trade representative Li Chenggang in the first known talks since Trump's "Liberation Day" announcement.

"We've made substantial progress between the United States and China in the very important trade talks," Bessent told reporters, while the White House hailed what it called a new "trade deal", without providing any additional details.

China's He said the atmosphere in the talks was "candid, in-depth and constructive", adding that they were "an important first step".

Greer added that "differences were not as large as maybe thought".

The two sides said they would provide details Monday.

World Trade Organization chief Ngozi Okonjo-Iweala said after her own meeting with He that the talks with the United States "mark a significant step forward and, we hope, bode well for the future".

Before the discussions, Trump had indicated he might lower his tariffs, writing on social media that an "80% Tariff on China seems right!"

Asian markets started the week on a strong note, with Hong Kong up more than one percent, while Shanghai also enjoyed healthy buying interest.

Sydney, Seoul, Taipei and Wellington were all in the green, with Tokyo flat.

US futures surged more than one percent.

The dollar also rose, as did oil prices owing to speculation easing tensions would help demand. Gold, which rallied last month over a rush to safe havens, extended losses.

"The initial reaction to the weekend US-China talks (is) predictably encouraging," said Chris Weston at Pepperstone.

"While this was always the likely outcome, it does represent an important step forward in the dialogue process and is obviously constructive, and we now look for the necessary substance and whether the two countries will take the tangible step towards the speculated US import tariff rates of 60 percent."

However, he warned traders "will have a low tolerance for inaction -- market players want the tariff rates taken down to 60 percent swiftly and in one action".

Karsten Junius at Bank J. Safra Sarasin was also cautious.

"We expect financial markets to remain volatile over the coming months, as they have almost fully priced out negative economic surprises and could once again be disrupted by more serious obstacles in trade negotiations," he said in a commentary.

"In all likelihood, things may still get worse before they get better."

Investors are also awaiting the release this week of data on US inflation and retail sales, which will provide a fresh snapshot of the world's biggest economy since the tariffs were unveiled.

- Key figures at around 0300 GMT -

Tokyo - Nikkei 225: FLAT at 37,519.80 (break)

Hong Kong - Hang Seng Index: UP 1.3 percent at 23,171.53

Shanghai - Composite: UP 0.6 percent at 3,363.13

Euro/dollar: DOWN at $1.1227 from $1.1257 on Friday

Pound/dollar: DOWN at $1.3279 from $1.3308

Dollar/yen: UP at 146.13 yen from 145.31 yen

Euro/pound: DOWN at 84.55 pence from 84.57 pence

West Texas Intermediate: UP 0.1 percent at $61.06 per barrel

Brent North Sea Crude: FLAT at $63.90 per barrel

New York - Dow: DOWN 0.3 percent at 41,249.38 (close)

London - FTSE 100: UP 0.3 percent at 8,554.80 (close)

P.Staeheli--VB