Investing.com-- Asian stocks rose on Monday, with China in the lead after Beijing and Washington announced that they had reached a trade deal, while a ceasefire between India and Pakistan also primed the Nifty for strong gains.
U.S. stock index futures also rose sharply in Asian trade, with NQM25 up nearly 2% after Chinese and U.S. officials signaled on Sunday that a trade deal had been met, and that more details will be released later on Monday.
But gains in some indexes were held back by a drop in pharmaceutical stocks, after U.S. President Donald Trump said he will sign an executive order to slash U.S. drug prices.
Among major individual stocks, chipmaker TSMC (TW:2330) (NYSE:TSM) rose 1% in Taiwan trade after it posted record-high sales for April on Friday.
China stocks surge on US trade deal
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes added about 1.1% and 0.9%, respectively, while Hong Kong’s Hang Seng outperformed with a 1.5% jump.
U.S.officials said recent talks in Geneva, Switzerland, had gone well, and that a trade deal with China, to lower America’s trade deficit, had been reached.
Chinese officials also flagged welcome progress in the talks, and said that they will make a joint announcement with the U.S. later on Monday.
A potential trade deal marks a major deescalation in a bitter trade war between the world’s biggest economies, after they slapped trade tariffs of over 100% on each other in April.
Trump had said last week that he was looking at reducing tariffs on China to about 80% if the weekend talks went well.
Still, it was unclear what the details of the trade agreement were, and just how much of a deescalation they would elicit. This kept gains across Asian markets constrained, with focus largely on the upcoming announcement.
Japan’s Nikkei 225 added 0.1%, while the TOPIX was flat. Australia’s ASX 200 rose 0.3%.
Several market holidays in Southeast Asia kept regional trading volumes muted.
India stocks soar on Pakistan ceasefire
India’s Nifty 50 index jumped nearly 3% in morning trade, as a U.S.-brokered ceasefire in the Kashmir region appeared to be holding, with reports of a scaling down in artillery and drone activity along the India-Pakistan border since early-Sunday.
Fighting between India and Pakistan broke out earlier in May after India struck several targets in Pakistan which it claimed were linked to a deadly attack in India’s Kashmir region in April.
Indian stocks had fallen on the military escalation, with the Nifty losing 1.5% in the past three sessions.
But Trump’s offer to help broker a deal over the hotly contested Kashmir region appeared to have ruffled some feathers in New Delhi, which has historically remained skeptical of third-party mediation in the region.
Focus was now on whether the ceasefire will hold, after some initial reports of breaches on Saturday. Focus was also on India’s suspension of the Indus Waters Treaty, which cuts the flow of a major river into Pakistan.
Asian pharma stocks fall as Trump flags order to slash prices
Despite broader gains, Asian pharmaceutical stocks- particularly those with high U.S. exposure- fell on Monday after Trump said he will sign an executive order to slash drug prices in the country.
Trump said he will bring U.S. drug prices by between 30% and 80%, and that drug prices will increase in other parts of the world will increase to compensate. He did not specify how this would happen.
Japan’s Chugai Pharmaceutical Co., Ltd. (TYO:4519), Daiichi Sankyo Co., Ltd. (TYO:4568), and Takeda Pharmaceutical Co., Ltd. (TYO:4502) fell between 4% and 7%, and were among the top weights on the Nikkei.
South Korea’s Sk Biopharmaceuticals Co Ltd (KS:326030) and Samsung Biologics Co Ltd (KS:207940) fell 2.8% and 3.9%, respectively, while Australian vaccine maker CSL Ltd (ASX:CSL) fell 0.4%.
India’s Nifty Pharma index lagged gains in broader markets with a 0.4% dip.