Washington and Beijing agreed to extend their trade truce by two months following a summit between US President Donald Trump and Chinese President Xi Jinping in Washington this week, pushing the deadline from November 10 to January 10, 2027. Treasury Secretary Scott Bessent confirmed the extension, which fell short of the longer rollover several investors had expected.
A carefully staged visit
Xi arrived at Joint Base Andrews on Wednesday for his first visit to the United States in nearly three years, and Trump greeted him personally on the tarmac — the first time in 11 years a sitting president has done so for a foreign leader, according to C-SPAN, which tracks presidential events. The three-day visit included a military ceremony, a tour of the National Archives, and a state dinner on Thursday that assembled a roster of US technology executives, including Apple's Tim Cook, Nvidia's Jensen Huang and OpenAI's Sam Altman.
Notably absent from Xi's delegation were Chinese corporate chief executives, according to people familiar with the arrangements, a contrast that cooled expectations for concrete commercial agreements alongside the political choreography.
Deep differences remain
But several disputes stayed unresolved heading into the truce extension. Washington and Beijing remain at odds over export controls on rare-earth minerals and advanced computer chips, China's relationship with Iran, and US support for Taiwan — an issue people familiar with the talks said Xi was likely to raise even though Washington would prefer to avoid it. Trump was expected to hold firm on existing export controls despite Xi's objections.
Markets give a muted verdict
Chinese equities recorded their steepest single-day decline in a month on Thursday, the day the truce extension was announced. The Shanghai Composite fell 1.22% to 3,888.37, while the CSI 300 slid 1.73% to 4,439.14. That same session, Hong Kong's Hang Seng eased just 0.3%, as investors judged the two-month extension shorter than the one-year rollover UBS analysts said the market had been pricing in. Japan's Nikkei 225 was the exception, adding 0.76% as trading resumed after a three-day holiday.
The subdued mood carried into Friday's session, layered on top of a separate global bond selloff that had pushed the US 10-year Treasury yield to a 19-year high a day earlier. Hong Kong's Hang Seng dropped nearly 2%, with its technology sub-index down more than 2.5%, while Australia's S&P/ASX 200 lost 0.5% and Singapore's Straits Times Index eased 0.2%. Mainland Chinese, South Korean and Taiwanese markets were closed for holidays, thinning regional trading volumes. Japan's Nikkei 225 and the broader Topix extended their gains, up 1.3% and 1.2% respectively, helped by a weaker yen. Adding to the pressure on mainland shares, the People's Bank of China withdrew a net 110.5 billion yuan, or roughly $16.5 billion, from the money market on Thursday through its reverse repo operations.
What's needed for a sustained rally
Brokerages in the region said the truce alone would not be enough to extend the rally. Kaiyuan Securities said maintaining the truce mainly supports valuations through a recovery in risk appetite, an effect it said markets had largely already priced in. Guoyuan Securities said only further movement on export orders, tax costs, supply-chain constraints and chip restrictions would turn the summit into sustained earnings-driven gains rather than a one-off, event-driven bounce. According to CLSA's head of North Asia semiconductor research, Sanjeev Rana, Washington is unlikely to ease chip export controls even as both sides discuss cooperation on artificial intelligence safety.
Another meeting between Trump and Xi is considered likely before the end of the year, with the Asia-Pacific Economic Cooperation summit in November and the Group of 20 gathering in the United States in December cited as the next possible venues.