Asia Markets Steady as Trump-Xi Talks Begin; Fed Cuts Rates, BOJ Decision Looms

Asian markets responded in a mixed fashion on Thursday as investors closely monitored the high-stakes summit between U.S. President Donald Trump and Chinese President Xi Jinping in Busan, South Korea. Their first one-on-one meeting since 2019 has sparked optimism for a trade breakthrough in the ongoing trade tensions between the two largest economies of the world.

The Federal Reserve's 0.25% rate cut provided a jolt to international markets earlier this week. But Fed Chairman Jerome Powell's cautious tone on further cuts deflated investors' enthusiasm, and traders now expect a diminished likelihood of another December rate cut.

In Japan, the Nikkei 225 climbed 0.1% ahead of the Bank of Japan policy announcement, when the bank is set to leave rates unchanged. The U.S. dollar fell against the yen modestly in reaction to remarks by Treasury Secretary Scott Bessent to hike interest rates more aggressively to prevent currency depreciation.

South Korea's KOSPI index surged over 1%, driven by Samsung Electronics' record-breaking 32% gain in third-quarter profit. Hong Kong and Taipei registered small gains, while Shanghai and Sydney were flat.

The Trump-Xi summit began on a cordial note with both leaders sounding optimistic about future relations. Key issues on the agenda are rare earth mineral supply chains, AI competition, and geopolitics in Taiwan and Ukraine.

Even after recent rallies fueled by technology, analysts caution that most of the optimism might already be factored into the markets. Investors are still risk-averse as central banks around Asia consider their next steps amidst evolving U.S. monetary policy.