Why did Asian markets struggle after the China-US phase one deal?

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Asian Markets Showed Hesitation Following China-US Trade Deal Announcement

Asian markets experienced a subdued reaction to the announced China-US trade agreement, with investors primarily waiting for further details of the pact. This cautious sentiment led to declines in several key Asian exchanges. Tokyo closed 0.3 per cent lower, while Hong Kong saw a 0.3 per cent drop in afternoon trading. Seoul and Wellington each recorded a 0.1 per cent decrease, and Manila experienced a more significant fall of over one per cent. Bangkok and Mumbai also retreated, reflecting a broader trend of market caution across the region.
Investors Awaited Specifics of the Trade Agreement

A primary driver for the hesitant market response was the lack of detailed information regarding the China-US trade agreement. While the announcement on Friday confirmed a partial deal that would de-escalate the long-standing tariff dispute, including the cancellation of planned tariffs and the rollback of some existing ones, investors were seeking concrete specifics. The precise nature of China's commitment to purchasing US manufactured goods, energy products, and agricultural exports, as well as the details of tariff adjustments, remained unclear. This ambiguity contributed to a wait-and-see approach among investors, who were keen to understand the full implications of the deal.
Market Performance Varied Across Asian Exchanges

Despite the overall cool reception, some markets bucked the trend. Shanghai's Composite index rose by 0.6 per cent, buoyed by China's retail and industrial sector data that exceeded forecasts. Sydney's market climbed by a notable 1.6 per cent, with Taipei and Jakarta also registering gains. This divergence in performance highlights that while a general sense of caution prevailed, specific national economic data and individual market dynamics also played a role in investor decisions.
Deal Believed to Fall Short of Full Market Expectations

Analysts suggested that the "phase one" deal, while averting further tariff escalation, may not have been sufficient to fully restore business confidence or stimulate a significant recovery in exports and investment. The path towards a comprehensive agreement was still considered to be a long way off. This perspective indicates that while the immediate de-escalation was welcomed, the market's anticipation was for a more complete resolution that could provide a stronger foundation for economic recovery and growth.

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Why did Asian markets struggle after the China-US phase one deal?

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