Global stocks gain and oil drops to $102 as US and China prepare for Washington summit

Equities gain on US-China trade talks

Global equity markets advanced on Monday morning as investors tracked preparatory diplomatic discussions between Washington and Beijing. Stock exchanges across Asia recorded gains, led by South Korea's Kospi rising between 1.5% and 2%, while Hong Kong's Hang Seng climbed 0.88% and China's CSI 300 added 0.6%. Tokyo markets remained closed for the Silver Week holiday that extends through Wednesday. European bourses followed with positive morning sessions, as Frankfurt gained up to 0.74%, Paris rose 0.48%, and London advanced 0.23%. US index futures pointed to an opening increase of roughly 0.5% after interest rate hikes from the Federal Reserve and the Bank of Japan the previous week.

Preparatory negotiations in New York

US Treasury Secretary Scott Bessent met Chinese Vice Premier He Lifeng in New York on Sunday to prepare for the upcoming bilateral meeting between US President Donald Trump and Chinese President Xi Jinping. The two leaders will meet on Thursday in Washington, where agenda items include investment, trade dispute extensions, and artificial intelligence coordination. Bessent confirmed that officials discussed establishing a dedicated bilateral communication channel titled the US-China AI dialogue, while Chinese state media described the exchange as candid, in-depth, and constructive. A central focal point remains the existing bilateral trade truce, which is scheduled to expire on 10 November. Stephen Innes, an analyst at Quintex Intel, outlined the market expectations surrounding the talks.

Scott Bessent and Chinese vice premier He Lifeng have already laid the groundwork in New York, with trade, investment and artificial intelligence on the table, but this is not a market waiting for a grand bargain.

Oil and gas prices drop on Gulf shipping recovery

Energy commodity prices retreated on Monday morning following updates on Middle Eastern crude supply routes. Brent crude futures for November delivery fell by over 2% to trade between $101.80 and $102.05 per barrel, down from peak levels near $110 seen early last week, though remaining above the pre-Iran war baseline of around $72. West Texas Intermediate October futures traded at $98.10 per barrel, while European natural gas prices dropped to 77.60 euros per megawatt-hour, a decrease of nearly 6% compared to the prior Monday. A report from JPMorgan indicated that crude transit through the Strait of Hormuz reached a six-month high of 17.1 million barrels per day over the last ten days, which is 6 million barrels below the 2025 daily average. The volume increase follows Saudi Arabian efforts to reroute oil through the strait to restore shipments after disruptions to its East-West pipeline.

Geopolitical developments and bond market reactions

Market participants are monitoring the United Nations General Assembly in New York, where Trump stated he is open to meeting Iranian President Masoud Pezeshkian. Regional tensions persist following hostilities between Yemen's Houthi movement and Saudi Arabia, alongside Iranian claims of potential US military actions. European bond markets showed slight yield decreases following regional elections in Germany, with the Italian BTP yield falling by 7 basis points and the German Bund yield declining by 5 basis points. The Italian BTP-Bund yield spread narrowed by 3 basis points to 89 basis points. Equity analysts at Goldman Sachs and Ashton Intelligence anticipate that bilateral diplomacy between Washington and Beijing will focus on stabilizing bilateral ties rather than delivering comprehensive concessions. Anna Ashton of Ashton Intelligence evaluated the scope of the upcoming summit.

I think the best both sides can realistically expect is that the status quo is maintained.