Asian stocks saw gains on Monday, driven by positive news from both China and India. Chinese stocks led the rally after Beijing and Washington announced they had reached a trade agreement, while a ceasefire between India and Pakistan boosted market sentiment in India.
U.S. stock index futures also jumped in Asian trading, with the Nasdaq futures up nearly 2%. The rally followed a Sunday announcement from Chinese and U.S. officials signaling the completion of a trade deal. Further details of the deal were expected later on Monday.
However, some market gains were limited due to a drop in pharmaceutical stocks. This came after U.S. President Donald Trump announced plans to sign an executive order aimed at reducing drug prices in the U.S.
China’s Stock Market Soars on Trade Deal News
In China, the Shanghai Shenzhen CSI 300 index rose by 1.1%, while the Shanghai Composite gained 0.9%. Hong Kong’s Hang Seng index outperformed with a 1.5% increase. U.S. officials reported positive developments from trade talks in Geneva, Switzerland, and confirmed that a deal had been reached to reduce America’s trade deficit with China.
Both U.S. and Chinese officials expressed optimism, with China planning to make a joint announcement with the U.S. later on Monday. The trade deal marks a significant de-escalation of the ongoing trade war between the two largest economies. The deal comes after tariffs of over 100% were imposed on each other’s goods in April.
Despite the positive news, the details of the trade agreement remained unclear, causing some market caution. As a result, gains across Asian markets were somewhat muted, with attention focused on the forthcoming announcement. Japan’s Nikkei 225 saw a small gain of 0.1%, while the TOPIX index remained unchanged. Australia’s ASX 200 rose 0.3%. Several Southeast Asian markets were closed for holidays, which limited trading volume in the region.
India’s Market Rises on Kashmir Ceasefire
In India, the Nifty 50 index saw a 1.9% increase in pre-open trade, signaling a positive start. This came after reports that a ceasefire brokered by the U.S. in the Kashmir region was holding, with reduced artillery and drone activity along the India-Pakistan border. The ceasefire followed escalating tensions earlier in May, when India launched military strikes in Pakistan, claiming they were targeting groups involved in a deadly attack in Kashmir.
Although Indian stocks had fallen slightly due to the tensions, the ceasefire news helped restore market optimism. However, Trump’s involvement in facilitating the deal raised concerns in New Delhi, as India has historically opposed third-party mediation in the Kashmir conflict.
Pharma Stocks Drop After Trump’s Drug Price Plan
While most Asian markets rose, pharmaceutical stocks faced losses. U.S. pharmaceutical companies with high exposure to Asia saw their stocks drop after President Trump’s announcement that he would sign an executive order to reduce drug prices in the U.S. by 30% to 80%. Trump also indicated that drug prices would rise in other parts of the world to offset the cost cuts in the U.S., but did not provide further details.
In Japan, shares of Chugai Pharmaceutical, Daiichi Sankyo, and Takeda Pharmaceutical dropped between 4% and 7%, making them among the biggest losers on the Nikkei index. In South Korea, stocks of SK Biopharmaceuticals and Samsung Biologics fell by 2.8% and 3.9%, respectively. Australia’s CSL, a major vaccine maker, also saw a slight decline of 0.4%.
In conclusion, Asian markets had a strong start to the week, driven by positive news on trade and geopolitical developments, though pharmaceutical stocks faced challenges from Trump’s new executive order.
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