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Asia stocks rise on US-China trade deal, Indo-Pak deescalation

2025-05-12 11:56:07

Asian stocks rose on Monday, with China in the lead after Beijing and Washington announced that they had reached a trade deal, while a ceasefire between India and Pakistan also primed the Nifty for strong gains.

U.S. stock index futures also rose sharply in Asian trade, with NQM25 up nearly 2% after Chinese and U.S. officials signaled on Sunday that a trade deal had been met, and that more details will be released later on Monday.

But gains in some indexes were held back by a drop in pharmaceutical stocks, after U.S. President Donald Trump said he will sign an executive order to slash U.S. drug prices.

Among major individual stocks, chipmaker TSMC (TW:2330) (NYSE:TSM) rose 1% in Taiwan trade after it posted record-high sales for April on Friday.

China stocks surge on US trade deal

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes added about 1.1% and 0.9%, respectively, while Hong Kong’s Hang Seng outperformed with a 1.5% jump.

U.S.officials said recent talks in Geneva, Switzerland, had gone well, and that a trade deal with China, to lower America’s trade deficit, had been reached.

Chinese officials also flagged welcome progress in the talks, and said that they will make a joint announcement with the U.S. later on Monday.

A potential trade deal marks a major deescalation in a bitter trade war between the world’s biggest economies, after they slapped trade tariffs of over 100% on each other in April.

Trump had said last week that he was looking at reducing tariffs on China to about 80% if the weekend talks went well.

Still, it was unclear what the details of the trade agreement were, and just how much of a deescalation they would elicit. This kept gains across Asian markets constrained, with focus largely on the upcoming announcement.

Japan’s Nikkei 225 added 0.1%, while the TOPIX was flat. Australia’s ASX 200 rose 0.3%.

Several market holidays in Southeast Asia kept regional trading volumes muted.

India stocks eye strong open on Pakistan ceasefire

Gift Nifty 50 Futures for India’s Nifty 50 index jumped 1.9% in pre-open trade, pointing to a positive open for the benchmark.

This came as a U.S.-brokered ceasefire in the Kashmir region appeared to be holding, with reports of a scaling down in artillery and drone activity along the India-Pakistan border since early-Sunday.

Fighting between India and Pakistan broke out earlier in May after India struck several targets in Pakistan which it claimed were linked to a deadly attack in India’s Kashmir region in April.

Indian stocks had fallen on the military escalation, albeit marginally.

But Trump’s offer to help broker a deal over the hotly contested Kashmir region appeared to have ruffled some feathers in New Delhi, which has historically remained skeptical of third-party mediation in the region.

Asian pharma stocks fall as Trump flags order to slash prices

Despite broader gains, Asian pharmaceutical stocks- particularly those with high U.S. exposure- fell on Monday after Trump said he will sign an executive order to slash drug prices in the country.

Trump said he will bring U.S. drug prices by between 30% and 80%, and that drug prices will increase in other parts of the world will increase to compensate. He did not specify how this would happen.

Japan’s Chugai Pharmaceutical Co., Ltd. (TYO:4519), Daiichi Sankyo Co., Ltd. (TYO:4568), and Takeda Pharmaceutical Co., Ltd. (TYO:4502) fell between 4% and 7%, and were among the top weights on the Nikkei.

South Korea’s Sk Biopharmaceuticals Co Ltd (KS:326030) and Samsung Biologics Co Ltd (KS:207940) fell 2.8% and 3.9%, respectively, while Australian vaccine maker CSL Ltd (ASX:CSL) fell 0.4%.

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