Markets rose to new peaks on the back of US and Chinese trade negotiators agreeing a framework on tariffs and other issues.

Representatives of the two nations are in Kuala Lumpur for a meeting of the Association of Southeast Asian Nations ahead of US president Donald Trump’s meeting with China’s president Xi Jinping in South Korea on Thursday.

The talks are said to have laid the groundwork for a truce on tariffs and a deal on TikTok’s US operations. An agreement is aimed at avoiding further escalation of a trade war between the world’s two largest economies.

The Nikkei 225 index in Japan surged through 50,000 points for the first time, while the Kospi index in South Korea broke through 4,000 points, also for the first time. The FTSE China A50 Index futures opened 0.7% higher.

There were more modest gains in Europe with the FTSE 100 index closing up 8.20 points, or 0.1%, at 9,653.82. It had earlier set a new intra-day high of 9,672.74.  The CAC 40 in Paris ended up 0.2%, while the DAX 40 in Frankfurt closed 0.3% higher.

WTI crude oil gained 0.65%. Precious metals continued to fall due to improved trade sentiment.

US Treasury Secretary Bessent said Chinese and American officials had developed a “highly successful framework” during the negotiations. “I believe this framework is constructive and far-reaching, enabling us to move forward and laying the groundwork for a meeting between the leaders of both countries based on a very successful framework.”

Mr Trump has imposed the steepest levies on China which has responded with measures of its own, including restrictions on the export of rare earths – materials essential to the production of many electronics. The US president accused Beijing of “becoming very hostile” and trying to hold the world “captive”.

China processes around 90% of the world’s rare earths, which go into everything from solar panels to smartphones, making supply of them to US manufacturers a key bargaining chip.

A deal is also said to be close on prising video-sharing platform TikTok’s US arm from its Chinese parent company ByteDance amid national security concerns.

Mr Trump had warned that he would shut down TikTok unless the US operations were sold, but has repeatedly extended the deadline for talks to enable a solution to be found.

Nigel Green, CEO of financial adviser deVere Group, said: “This is typically the kind of market catalyst that moves everything at once. The tone of risk has changed dramatically.

“This framework represents an inflection point for the global economy. For months, supply chains have been held hostage to uncertainty.

“Now, manufacturers and markets have a path forward. The ripple effects will be felt—from semiconductors and shipping to commodities and emerging-market debt.

“The reopening of dialogue between the world’s two largest economies will energise equity markets.

“Investors are likely to rotate back into cyclicals—industrials, materials, logistics and tech hardware. The sentiment swing could also lift global growth forecasts for the first time this quarter.”

The US-China talks are accompanied by a number of deals Washington has announced in Asia, including Malaysia, Cambodia, Thailand and Vietnam.