Markets are starting the week on a cautiously optimistic note after Wall Street surged on Friday, with the Dow up 473 points and our own market expected to open about 26 points higher. The Aussie dollar has firmed to around 65.5 US cents. But make no mistake: this week’s real action won’t come from the usual economic data. It’ll come from the meeting between Donald Trump and Xi Jinping at the APEC summit in South Korea.

This is a genuine make-or-break moment for markets. If we get a sensible, rational decision from both leaders and a clear path toward a trade truce, stocks could easily take another leg higher. But if the meeting turns sour and the rhetoric escalates, expect volatility to return fast. Markets hate uncertainty, and trade wars are the ultimate uncertainty driver.

Adding to the optimism on the US side is the ongoing support from lower interest rates and the continued momentum around artificial intelligence. These factors have been helping US stocks power ahead, even in the face of political noise. If Trump and Xi can find some common ground, it could light another spark for global equities. But if they dig in, the anxiety will come back and portfolios could feel the heat.

Closer to home, we’ll get Australia’s CPI data on Wednesday — and it’s an important one. If the underlying inflation rate comes in at 0.8 per cent or lower, the market will start to price in a rate cut with near certainty. Anything higher, and the Reserve Bank will likely wait for clearer signs of cooling inflation before acting. It’s another example of how finely balanced the policy outlook is.

Over in the US, GDP figures are also due, but with the ongoing government shutdown, it’s hard to put too much faith in those numbers right now. Until that’s resolved, markets will take them with a grain of salt.

So as the week unfolds, keep an eye on that Trump-Xi meeting — it’s the one that could set the tone for your portfolio. A truce would be a big win for investors. Another flare-up could undo months of steady gains. Either way, it’s going to be a fascinating week for markets.