Asian Markets Surge on Optimism Around US–UK Trade Deal

Japan leads regional gains as investors hope for broader tariff relief and renewed US–China negotiations

Asian stock markets rallied on Friday, buoyed by a wave of optimism following the announcement of a new trade agreement between the United States and the United Kingdom. Investors are now hopeful that similar breakthroughs could be on the horizon—especially in negotiations between the US and China.

US–UK Trade Deal Sparks Market Optimism

President Donald Trump’s signing of a trade framework with the UK set the tone for global markets. Although the US maintained its baseline 10% tariff on UK imports, Britain agreed to reduce its tariffs from 5.1% to 1.8%. In addition, exemptions were granted for UK steel and aluminium—previously subject to a 25% US import levy.

Commerce Secretary Howard Lutnick suggested that more such deals were in the pipeline, though he noted the 10% universal tariff would likely remain in place for most nations. Markets took these developments as signs of easing protectionism and potential opportunities for new agreements.

Japan Leads Asian Market Gains

Japan’s Nikkei 225 index surged by 1.5%, while the broader TOPIX index climbed 1.3%. The gains were also supported by a weakening yen, which benefits Japanese exporters.

Elsewhere, South Korea’s KOSPI was flat, while the Philippines' PSEi Composite rose 1%. Australia’s S&P/ASX 200 added 0.5%, and Singapore’s Straits Times Index increased by 0.6%.

India’s Nifty 50 Futures edged up 0.2% despite rising geopolitical tensions with Pakistan. On Thursday night, India reported neutralising drone and missile strikes on several military bases, including Jammu and Pathankot, signalling a serious escalation.

Chinese Markets Lag Despite Resilient Trade Data

While most of Asia posted gains, Chinese equities lagged behind. The Shanghai Composite dipped 0.3%, while the CSI 300 fell 0.4%. Hong Kong’s Hang Seng Index also dropped by 0.4%.

Friday’s trade data from China showed mixed results. Exports rose 8.1% year-on-year—beating expectations of just 1.9% growth, but still below last month’s 12.4% increase. Meanwhile, imports dropped by just 0.2%, far better than forecasts of a 5.9% decline.

Despite tariffs, the figures suggest both domestic and global demand remain robust. Analysts noted that exemptions on key goods, such as electronics, have helped cushion the blow.

Investors are now turning their attention to China’s upcoming consumer price index (CPI) data, due on Saturday, which could offer more insight into the country’s inflation trajectory and domestic consumption trends.

Conclusion: Trade Deal Hopes Drive Momentum—But Uncertainty Remains

The US–UK trade deal has injected fresh optimism into global markets, particularly across Asia. Investors are increasingly hopeful that this could pave the way for progress in stalled US–China negotiations and reduce global trade tensions.

However, not all markets have benefited equally. While Japan and Southeast Asia saw solid gains, China’s underwhelming market response highlights ongoing caution.

As inflation data and geopolitical risks continue to influence sentiment, Asia’s rally may be just the beginning of a volatile but opportunity-rich chapter for global investors.

Sources: (Investing.com, Reuters)