KOSPI 4,000, Nikkei surpasses 50,000…Asia markets hit record highs

Positive sentiment spreads as U.S.-China trade tensions ease

Expectations of Fed rate cuts and big tech earnings also join in

Signals of easing trade tensions between the United States and China emerged one after another, and on the 27th (local time) Asian stock markets including Korea, Japan and Taiwan all simultaneously hit record highs.

The positive mood spread to European markets, pushing Europe's broad STOXX 600 index to a record high. U.S. stock index futures were also trading higher before the open.

On the 27th, Korea's KOSPI rose 2.57%, surpassing 4,000 points for the first time in history and closing at 4,042.83 points. Japan's Nikkei 225 index also rose 2.46% to exceed 50,000 points for the first time ever. Taiwan's TAIEX index also rose 1.68% to 27,993.63 points, marking a record high as well.

The MSCI Asia Pacific Index rose 1.5%, and the MSCI Emerging Markets Index rose 1.3%.

U.S. stock index futures also rose ahead of the Federal Reserve's rate decision meeting and big tech companies' earnings announcements.

S&P 500 futures were up 0.8%, Nasdaq 100 futures rose 1.1%. Dow Jones Industrial Average futures gained 0.6%.

By contrast, safe-haven assets such as gold and bonds fell. Spot gold fell 1.3% to 4,058.71 dollars per ounce.

The dollar index was steady at 98.92, and the dollar rose slightly to 152.87 yen, approaching a two-week high.

The U.S. 10-year Treasury yield rose 3.1 basis points (1bp=0.01%) to 4.027%. Commodity prices such as soybeans, wheat and corn rose on prospects of trade negotiations.

The Chinese yuan, reflecting optimism over trade talks, hit a one-month high at 7.1091 to the dollar. Derek Halpenny, MUFG's head of research, said, "Based on the details reported today, if the talks are concluded, the yuan has room for further appreciation."

He said, "The U.S. dollar will weaken as investors consider better prospects for currencies other than the dollar, due to improved risk conditions and expectations for global economic growth."

Senior economic officials from China and the United States discussed the framework of a trade agreement to be decided at a summit between U.S. President Trump and Chinese President Xi Jinping to be held in Korea this week.

If a trade agreement is reached, it is expected that U.S. tariffs and China's controls on rare earth exports would be temporarily suspended.

This week the U.S. Federal Reserve's policy meeting is scheduled. The September consumer price index (CPI) released last Friday came in lower than expected, making a 0.25% rate cut all but certain.

The European Central Bank (ECB) and the Bank of Japan are expected to keep rates unchanged at policy meetings later this week.

On Wednesday the 29th and Thursday the 28th, five of the Magnificent Seven companies that account for about a quarter of the U.S. S&P 500 index—Microsoft, Apple, Alphabet, Amazon and Meta Platforms—will report results this week.

Dillin Wu, a strategist at the Pepperstone Group, said, "Market sentiment appears optimistic, but ultimately the market depends on the Trump-Xi summit."

Kim Jeong-a, guest reporter kja@hankyung.com