"It's a shot in the arm for the market," Guosheng Securities analyst Zhang Qiyao wrote, describing the limited deal as "better than expected". J.P. Morgan Asset Management's chief market strategist Asia, Tai Hui, said the market optimism might not be well supported by economic reality.
"We have seen a truce established and then broken before," Tai wrote. "CEOs are not going to restart investing again merely because of the latest round of agreement between the two sides. The fundamental outlook for global growth has not changed on the back of the latest announcement."
Nomura strategist Ting Lu said that the near-term agreement did little to suggest that the two sides had bridged fundamental differences on trade, China's structural policies and national security that have been growing challenges in recent years. "We still see high uncertainty in officially reaching the 'phase one' deal," Lu wrote in note. Investors now wait for a slew of economic data this week, including GDP growth, inflation, industrial output and trade figures, for further clues about the local economy.
China's exports fell at a faster pace in September, while imports contracted for a fifth straight month, pointing to further weakness in the economy and underlining the need for more stimulus as the Sino-US trade war drags on. Normura's Lu, who expects China's GDP growth to drop to 5.9% year-on-year in the third quarter and 5.8% in the fourth, from 6.2% in the second quarter, said "the truce between US and China might boost sentiment, but we maintain our view that the worst is yet to come". Financial firms led the gains, as China launched timetable for full financial sector opening. Tech shares also posted solid gains.