After the Trump-Xi summit, markets are breathing a sigh of relief… but the war against Iran continues to worry investors

Financial markets reacted cautiously to the summit between the US president and the US president Donald Trump and Chinese leader Xi Jinping, whose speech focused on "strategic stability" between the two powers. While this meeting helped to ease some geopolitical tensions, the lack of major progress on trade and the conflict involving Iran dampened investor optimism.

Donald Trump's visit to Beijing, his first since 2017, ended Friday without any concrete announcements regarding the US-China trade dispute. Nor was any significant commitment obtained from Beijing to help end the war waged by the United States and Israel against Iran, a conflict that has lasted for more than two months and continues to shake global markets.

Even though investor expectations remained moderate before the meeting, some hoped the discussions could pave the way for de-escalation in the Middle East. The war and ongoing tensions between Washington and Tehran have indeed caused a sharp rise in energy prices and revived fears of a global economic slowdown.

On Asian markets, the reaction remained subdued on Monday. The Chinese yuan fell to its lowest level against the dollar in nearly two weeks, while investor attention quickly shifted to a global wave of bond selling, fueled by concerns about inflation and geopolitical tensions.

Chinese stocks remained relatively stable after falling more than 1% on Friday, amid a global climate of strong risk aversion. Investors also continue to monitor signs of a slowdown in the Chinese economy, while the trade outlook remains uncertain.

According to William Bratton, the summit is unlikely to have any immediate effects on the stock markets. However, he believes that the meeting between Donald Trump and Xi Jinping constitutes a positive signal in the long term, reducing the risk of further deterioration in relations between Washington and Beijing.

Despite this relative diplomatic easing, investors still face several major sources of uncertainty, including the evolving conflict with Iran, the volatility of global bond markets, and persistent tensions surrounding international trade.