Asian financial markets posted strong gains Thursday as artificial intelligence enthusiasm continued to drive investor sentiment, while attention turned to a critical diplomatic meeting between U.S. President Donald Trump and China’s Xi Jinping.
The American president is entering a series of discussions with China’s leader in Beijing, seeking to achieve economic victories, preserve a delicate trade agreement, and address challenging issues including the Iran conflict and weapons sales to Taiwan.
According to Michael Strobaek, global chief investment officer at Lombard Odier, maintaining current conditions might be the best outcome possible from a Trump-Xi encounter.
“I think that, amid the uncertainties around the Middle East ceasefire, that may be enough for now,” said Strobaek, noting expectations are low and groundwork for any major diplomatic breakthroughs appears thin.
ARTIFICIAL INTELLIGENCE DRIVES MARKET GAINS
Asian equity markets demonstrated strong performance, with MSCI’s comprehensive Asia-Pacific index excluding Japan climbing 1.2%, remaining close to last week’s record high.
Japan’s Nikkei reached a fresh all-time high as information revealed AI-related demand helped boost Japanese company profits. Seoul’s KOSPI advanced 1.7%, bringing its 2026 performance to a remarkable 88%.
SK Hynix, among Asia’s leading AI-focused companies, approaches the $1 trillion market capitalization milestone, positioning itself to become South Korea’s second company after Samsung to achieve trillion-dollar status. SK Hynix shares have surged more than 200% this year.
European market indicators suggested a positive opening while U.S. stock futures gained 0.23%.
However, market experts warn that rising oil costs and stalled Middle East peace negotiations could revive inflation concerns.
“Markets are trying to run two playbooks at once: AI and earnings says buy growth, but geopolitics and energy priced are quietly re-writing the inflation trajectory in the background,” said Charu Chanana, chief investment strategist at Saxo.
“While today’s session may still follow the AI momentum, a macro reality check remains likely from the Trump-Xi meeting.”
Brent crude futures showed minimal movement at $105.76 per barrel during early trading, while U.S. West Texas Intermediate futures traded at $101.14 per barrel. Energy prices continue significantly above pre-conflict levels, stoking global inflation fears.
INFLATION FIGURES STRENGTHEN DOLLAR
Currency markets saw the U.S. dollar gain strength as traders anticipated the Federal Reserve’s next interest rate action would be an increase following unexpectedly high inflation readings this week.
U.S. producer prices recorded their largest increase since early 2022, after Tuesday’s consumer price information demonstrated annual inflation accelerated at its quickest rate in three years.
Elevated inflation and robust employment figures have prompted some market participants to consider the possibility of a rate increase during the first half of next year, despite many economists and analysts still viewing a rate reduction as the central bank’s probable next step.
The euro traded at $1.1716, approaching its weekly low. Sterling stood at $1.35282, positioning the dollar index, which tracks the U.S. currency against six others, at 98.458 in early sessions.
The yen traded at 157.88 per U.S. dollar, maintaining trader vigilance for potential Tokyo intervention following recent dramatic movements that sources indicate resulted from official action to support the weakened currency. The two-year yield reached 3.9708%, declining 1.9 basis points but remaining near the 1-1/2-month peak from the previous session. The benchmark 10-year yield stood at 4.4629%, having approached nearly a one-year high on Wednesday.
