Trump-Xi Beijing talks raise US-China dealmaking hopes

Trump landed in Beijing on May 13 for what he called a "wild" visit, the first China trip of his second term. The summit carries significant tail risks and tail opportunities; markets are bracing for both. Boeing is actively pitching a deal for roughly 500 of its 737 Max jets to Chinese carriers, which would provide China's airlines with badly needed aircraft and hand Trump a headline-grabbing trade win. Meanwhile, NVIDIA's Jensen Huang joined Trump's delegation, fueling speculation that US-China semiconductor dialogues could yield supply-chain arrangements or H200 chip export concessions.

China's AI stocks surged on Huang's presence, with traders assessing the potential benefits of China securing H200 capability or reduced export restrictions. The semiconductor ecosystem is watching closely; any easing of restrictions could shift capex allocation across the region. Additionally, Trump has been repeating military threats against Iran ahead of the summit, but Huang's involvement signals some Washington officials view China as a key partner in de-escalation and regional stabilization. The broader framing is one of measured optimism: a trade deal with Beijing could ease some of the inflationThe rate at which prices rise across an economy. shock narrative and reduce geopolitical premium on energy prices.

For equities, a successful summit could dampen near-term recession fears by signalling US-China economic cooperation and reduced tariff escalation. Defense names have benefited from elevated geopolitical risk premiums; any de-escalation could unwind some of those gains. Tech exporters and industrials would benefit from improved China trade visibility. The dollar has been strong on higher rates, but a China trade win could reduce the urgency of further Fed hiking and temper the inflationThe rate at which prices rise across an economy. narrative slightly.

However, sceptics note that expectations are running ahead of likely outcomes. Trump's leverage is reduced if the US is simultaneously constrained by the Iran war and elevated energy costs. China is also more assertive and has shown resilience in trade negotiations. Any perceived weakness or disappointing deal terms could trigger sharp repricing, especially in materials and industrials that have priced in China reopening.