Key Points

• Markets gained as the focus turned to the China-US trade tensions ease scenario.

• Tech stocks led the rebound amid hopes for calmer U.S.–China relations.

• Investors balanced optimism with caution on the China-US trade tensions ease backdrop.

After days of ups and downs, global stock markets shot back up this week. This was because the US and China stopped using harsh language with each other, which gave people hope that one of the world’s most important trade disputes might be getting better.

The change started when Washington started to be nicer to Beijing, which meant that talks about fixing broken economic ties might start up again soon. That made investors think that the trade fight that has hurt global supply chains and growth prospects might finally be coming to an end.

Global recovery is fuelled by renewed hope

The change in mood quickly affected Wall Street. Technology and manufacturing stocks, which are the most sensitive to trade news, led the way as the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all went up. The story that “China-US trade tensions are easing” became the day’s main theme, which made investors feel more confident in many parts of the world.

The response was even stronger in Asia. The Nikkei 225 in Japan went up by more than 1,300 points, and the Hang Seng Index in Hong Kong went up by about 2% as worries about a bigger trade war went down. Market experts said that the rise was a sign of relief for investors who had been worried about the world getting worse over the past few weeks.

The tech boom is what keeps the global market up

The recovery was helped by tech stocks. Companies that rely heavily on cross-border supply chains, like chipmakers and cloud service providers, saw some of the biggest gains. Investors bet that restrictions that had slowed production in previous quarters would ease, which led to strong demand for semiconductors, especially in the U.S. and South Korea.

The change in tone also helped stocks in emerging markets and commodities. As traders left safe havens, oil prices stayed the same and global bond yields went up. Still, the fact that gold stayed strong and hit a new all-time high showed that investors were still cautious because they were afraid that diplomatic progress could stop at any time.

Analysts think the markets are calm but fragile

According to a report by the Punch news, analysts, on the other hand, said that the optimism might not last long if both governments don’t turn their words into real policy changes. Beijing hasn’t yet made any big changes to tariffs or made it easier to export important goods like semiconductors and rare-earth materials.

Several big banks said that the rally might not last long if there isn’t any real progress soon. Some strategists warned that if talks break down, the markets could drop by as much as 11%. For now, traders are keeping a close eye on Washington and Beijing for more signs as the world’s two biggest economies go through a rough patch in their relationship.