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Trump and Xi strike a deal over rare earths and tariffs

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Fed's Powell hints 25 bps cut may be last of 2025

BOJ votes 7-2 to hold interest rates, Ueda gives few clues

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Tech earnings weigh on U.S. stocks, early gains peter out

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ECB expected to stand pat later today

(Refreshes markets, adds Ueda, China comments on trade)

By Gregor Stuart Hunter

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 ( SSNLF ) 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 ( MSFT ) 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.