Asian markets trade mixed on Xi-Trump meeting watch, rate hike bets

Asian markets were mixed on Thursday as investors looked ahead to a planned meeting between Chinese President Xi Jinping and US President Donald Trump, according to Mettis Global. Participants were watching for hints on where US-China trade relations are heading. Japan's Nikkei 225 climbed 0.64% once trading resumed after a three-day holiday, while the Topix slipped 0.17%. Australia's S&P/ASX 200 dropped 1.33%, Hong Kong's Hang Seng eased 0.29%, and China's CSI 300 lost 0.79%, while South Korea stayed shut for a holiday.

US Treasury yields rose sharply, with the 10-year reaching 5.135%, its loftiest level since July 2007, while the two-year yield climbed to 4.947%, its strongest since May 2024. Fed funds futures price in a probability above 68% of another rate increase in October, up from about 49% a week ago. Consumers face mounting strain from costlier loans and high fuel prices, with Brent crude settling 3.9% higher on Wednesday at $103.08 a barrel.

Iranian President Masoud Pezeshkian told the UN General Assembly that Iran would keep resisting, blaming the US and Israel for global instability. Business activity in the US came in stronger than forecast, signalling the economy is gaining steam. Analysts however flagged supply bottlenecks and costlier fuel and transport as possible sources of higher inflation. Investors now await weekly US jobless claims, while Darden Restaurants and Costco Wholesale are due to report quarterly results.