- Trump and Xi strike a deal over rare earths and tariffs
- Fed's Powell hints 25 bps cut may be last of 2025 BOJ votes 7-2 to hold interest rates, Ueda gives few clues
- Tech earnings weigh on U.S. stocks, early gains peter out
- ECB expected to stand pat later today
SINGAPORE, Oct 30 (Reuters) - Asian stocks veered between gains and losses on Thursday after U.S. President Donald Trump said he had made a deal with Chinese President Xi Jinping on rare earths and tariffs, while the yen weakened after the Bank of Japan kept interest rates on hold.
After a near two-hour meeting with Xi, Trump said he had agreed to reduce tariffs on imports from China in exchange for Beijing resuming U.S. soybean purchases, keeping rare earths exports flowing and cracking down on the illicit trade of fentanyl.
Xi urged further cooperation in comments carried by Chinese state media after the meeting, while its Commerce Ministry later said it would pause some countermeasures for a year.
But markets sold off, as traders worried that the tariff detente between the two superpowers could prove fleeting. Previous trade negotiations have seen promising starts followed by setbacks.
MSCI's broadest index of Asia-Pacific shares outside Japan reversed an earlier increase of as much as 0.5% to last trade down 0.5%, while U.S. S&P 500 e-mini futures moved 0.1% lower after previous gains petered out.
In early European trade, pan-region futures were last up 0.2%, German DAX futures rose 0.3% and FTSE futures slipped 0.1%.
"The meeting represents a tactical pause or temporary de-escalation, rather than a structural breakthrough," said Masahiko Loo, senior fixed income strategist at State Street Investment Management in Tokyo.
"Markets are pricing in continued dialogue and tactical cooperation, but remain sceptical of any grand bargain," he added. "A shift in tone, particularly from Trump, could quickly reignite tariff threats and trigger risk-off sentiment."
Global markets are also in the midst of a string of central bank decisions that will give clues about the path ahead for interest rates.
Though the Bank of Japan stood pat on rates as expected, it repeated its pledge to continue increasing borrowing costs if the economy moves in line with its projections.
"The BOJ is tip-toeing towards a hike," said Fred Neumann, chief Asia economist at HSBC in Hong Kong. "With October a missed opportunity to nudge rates higher, all eyes are now on December, when a rate hike appears likely."
The Nikkei 225 fluctuated between gains and losses after the Bank of Japan's decision but eked out a record close.
The yen had rallied earlier after remarks by U.S. Treasury Secretary Scott Bessent calling for speedier rate hikes to avoid weakening the currency too much.
But the Japanese currency slipped 0.5% against the U.S. dollar , last trading at 153.46 yen per dollar, the yen's weakest level since February, and softened 0.6% to reach a record 178.31 against the euro .
The yen's decline accelerated as BOJ Governor Ueda said he does not think "there is risk of falling behind the curve" on monetary policy, and remained guarded about the timing of the central bank's next hike at a press conference in Tokyo.
The Federal Reserve cut interest rates on Wednesday by a quarter of a percentage point as expected, but the U.S. central bank's new policy statement included several references to the lack of official data during the ongoing federal government shutdown, and Fed Chair Jerome Powell told reporters later that policymakers are likely to become more cautious if it deprives them of further job and inflation reports.
Those comments prompted traders to slash their forecasts for a 25-basis-point rate cut from the U.S. central bank in December, which had been viewed as a near-certainty earlier. Fed funds futures now imply a 67.8% probability that the Fed will hold rates at its next meeting on December 10, compared with a 9.1% chance on Wednesday, according to the CME Group's FedWatch tool.
The yield on the U.S. 10-year Treasury bond was last around a three-week high of 4.0776%, up 1.96 basis points compared with a previous close of 4.058%.
The dollar index , which measures the greenback's strength against a basket of six currencies, edged back from a two-week high, down 0.1% at 99.075. Gold was last up 0.91% at $3,965.29 per ounce.
The euro was 0.2% firmer at $1.16215 ahead of a policy decision by the European Central Bank later in the day, at which it is expected to leave rates on hold for a third meeting in a row.
Elsewhere, the KOSPI index clung to gains after paring an advance of as much as 1.6% after Trump and South Korean President Lee Jae Myung finalised details of a trade deal, and was last 0.1% higher.
Shares in Samsung Electronics surged 3.6% after it reported on Thursday a 32% rise in third-quarter operating profit.
Corporate earnings season is fuelling fresh anxiety among investors over the cost of the AI buildout, even as the U.S. economy appears to remain in rude health, putting pressure on tech megacap stocks that account for the biggest weighting in the S&P 500 Index.
Meta on Wednesday forecast "notably larger" capital expenses next year as its revenues beat market estimates, while Microsoft's spending on artificial intelligence infrastructure soared to a record of nearly $35 billion in the September quarter. Shares of both companies slumped.
However, rival tech giant and Google parent Alphabet bucked the trend, with shares rising in after-hours trading after it beat revenue expectations.
In energy markets, Brent crude was last down 0.5% at $64.62 per barrel.
Reporting by Gregor Stuart Hunter; Editing by Kim Coghill and Jacqueline Wong
Source: Reuters