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Japan stocks led gains in Asia on Friday as investors assessed a truce between Washington and Beijing, following a meeting between President Donald Trump and his Chinese counterpart Xi Jinping.

They reached a trade deal of sorts during a high-stakes meeting in South Korea on Thursday, de-escalating a dispute over rare earth elements that had threatened to push the world’s two largest economies into a full-blown trade war.

“Both sides appear to be maintaining leverage for future negotiations by keeping these measures as bargaining chips,” said JPMorgan Asset Management’s global market strategist, Chaoping Zhu.

Japan’s Nikkei 225 rose over 1% to hit a fresh record, while the Topix added 0.79%, also scaling a new peak.

Shares of Panasonic Holdings declined over 8% after the firm lowered its forecast for full-year operating profit by 13.5% on Thursday, citing a decline in expected profit from its key energy unit, which supplies batteries to Tesla and other automakers.

South Korea’s Kospi added 0.22% after hitting a fresh record high on Thursday. The small-cap Kosdaq rose 0.47%.

Hyundai was trading up 9.6% in South Korea after Nvidia announced it was deepening its partnership with the automaker in autonomous vehicles, smart factories and robotics with a new AI factory powered by Nvidia’s Blackwell AI processors.

As part of this initiative, Hyundai and Nvidia aim to deploy 50,000 of Nvidia’s Blackwell GPUs — built on the chip designer’s most advanced architecture — as well as approximately $3 billion in AI infrastructure in Korea.

Australia’s S&P/ASX 200 started the day 0.45% higher.

Hong Kong’s Hang Seng Index slid 0.33%, while mainland China’s CSI 300 was flat.

China’s manufacturing activity in October contracted more than expected, shrinking to its lowest since May, an official survey showed on Friday, as trade tensions with Washington reignited during the month.

The official manufacturing purchasing managers’ index came in at 49, data from the National Bureau of Statistics showed, missing economists’ expectations for 49.6 in a Reuters poll. A reading above the 50 benchmark indicates growth while one below that suggests contraction.

The country’s manufacturing activity has remained in contraction since April, when U.S. President Donald Trump’s tariff campaign pressured Chinese factories as well as global demand.

Overnight in the U.S., all three major averages closed lower as investors digested a batch of Big Tech earnings. The S&P 500 dipped 0.99% to finish the day at 6,822.34, while the Nasdaq Composite dropped 1.57% to close at 23,581.14. The Dow Jones Industrial Average traded down 109.88 points, or 0.23%, to 47,522.12.

— CNBC’s Sean Conlon and Sarah Min contributed to this report.