Stocks rise, China-U.S. trade tensions cap gains

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.38%

Global stocks clawed back losses on Wednesday, though China-U.S. trade tensions kept a lid on risk appetite.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.38%, while the Nikkei added 1.5% after slipping 2.6% in the previous session.

Hang Seng Index rode the rally to add 1.2%, while CSI300 blue-chip index bucked the trend, easing a marginal 0.03%.

Nasdaq futures gained 0.31% while S&P 500 futures added 0.26%.

Still, sentiment remained fragile, with U.S. President Donald Trump saying on Tuesday that Washington was considering terminating some trade ties with China, including in relation to cooking oil.

China and the U.S. also began charging additional port fees on ocean shipping firms that move everything from holiday toys to crude oil.

It does suggest that a lasting truce is not going to be easy to achieve. But it’s also a reminder as well, that the market does need to be mindful that they shoot these arrows and then they sort of walk them back, said Tony Sycamore, a market analyst at IG.

U.S. central bank Chair Jerome Powell left the door open to further rate cuts on Tuesday and said the end of the central bank’s long-running effort to shrink the size of its holdings may be coming into view.

His comments, viewed by some as dovish, lifted markets slightly and reinforced expectations of more easing this year, with almost 48 basis points worth of cuts priced in by December.

The Fed may soon be looking to conclude (quantitative tightening) with an announcement at its upcoming October FOMC meeting possible, said Tom Kenny, senior international economist at ANZ.

We expect the Fed to cut by 25bp at both the October and December FOMC meetings, he added.

An upward revision of the International Monetary Fund’s 2025 global growth forecast also underpinned the market, which had taken a nosedive earlier in the week on renewed signs of strain in China-U.S. trade relations.