Asian equities and US stock index futures rose as traders looked ahead to the China-US summit later this week for signs of progress in trade and economic ties. Crude oil prices fell for a fourth consecutive session.

With Japan closed for a public holiday, the MSCI Asia Pacific Index climbed 0.2%. S&P 500 futures gained 0.3% after the benchmark index posted a modest advance on Friday, while Nasdaq 100 futures rose 0.4%.

Meanwhile, Brent crude dropped 0.3% to around $103.50 per barrel, and the FXCG US Dollar Index remained largely flat. The yen weakened slightly to roughly 157.05 against the US dollar, extending a loss of more than 2% over the prior week.

Senior Chinese and US officials met in New York. US Treasury Secretary Scott Bessent and He Lifeng, Vice Premier of the State Council of China, co-chaired the talks. Bessent stated that he had held productive consultations with Chinese counterparts on trade and artificial intelligence.

The meeting added a layer of caution to markets already grappling with multiple headwinds: the conflict in Iran, renewed inflation concerns, massive spending in artificial intelligence, and elevated global bond yields. Few major economic data releases are scheduled in the coming days. Therefore, following the Federal Reserve’s first rate hike since 2023 and a split decision by the Bank of Japan to raise borrowing costs, market attention is fixed on this summit.

The USD/JPY pair consolidated near 157 in early Asian trading, having fallen more than 2% in the previous week. Japan is set to begin a three-day holiday period, which is tightening market liquidity. Traders are on alert for sharp exchange-rate swings. Reports on Friday that Bank of Japan officials convened market participants to discuss interest rates fuelled speculation that the central bank may intervene in the currency market to support the yen.

Elsewhere across markets, gold edged lower to about $4,370 per ounce. Australian bonds traded slightly weaker in early session, tracking the decline in US Treasury yields seen on Friday.

Market expectations for further Federal Reserve rate hikes have driven investors to bet on higher short-term bond yields. The 10-year US Treasury yield closed just below 5% on Friday. London spot trading will resume later on Monday amid Japan’s holiday.

The International Monetary Fund warned that rising interest rates will make record debt burdens harder to service, and governments must take urgent additional steps to narrow budget deficits.

German bund futures are also in focus after German Chancellor Friedrich Merz said he would remain in office even though his party suffered its worst-ever defeat in state elections.

In addition, China’s State Administration for Market Regulation pledged on Sunday to strengthen oversight of malicious price competition, including cost investigations and price inspections for companies engaging in such practices. Authorities noted that the move aims to shift competition away from price cuts and toward improvements in product quality.

Oil and liquefied natural gas shipments through the Strait of Hormuz over the past two weeks hit a six-month high. A senior US regional commander said this demonstrates that US Navy protection and mine-clearing operations are “delivering results”.

Admiral Brad Cooper, Commander of US Central Command, said in a video address released on Saturday: “Clearly, momentum is building.” He stated that the main shipping lanes in the strait have been cleared of mines, and Persian Gulf allies have transported more than 1 billion barrels of crude oil through the waterway “over the past several months”.

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