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President Donald Trump said Thursday that the first day of high-level trade talks with China was going "very well." Officials later said the discussions made more progress than expected.

Momentum could build Friday when Trump meets Chinese Vice Premier Liu He, the country's chief trade negotiator.

The deal on offer: Officials familiar with the talks say possible outcomes will likely fall short of the sweeping, comprehensive trade deal that Trump has called for. But a smaller deal could include new currency agreements, Chinese commitments on farm purchases and the US scrapping a planned increase in tariffs next week.

"We are in the first steps of a first pass agreement likely covering agriculture and some manufacturing, with more to be negotiated in the next quarters," Sebastien Galy, a senior macro strategist at Nordea Asset Management, said in a research note.

The optimistic tone sent markets higher in Asia. The Shanghai Composite index added 0.3% while the Nikkei 225 rose 0.9%. The Hang Seng index climbed 1.5%.

Brexit chatter

US-China talks aren't the only set of high-stakes negotiations that have investors excited. UK and Irish leaders Boris Johnson and Leo Varadkar on Thursday raised hopes of a breakthrough on Brexit, saying they saw a "pathway" to a deal before October 31.

"I think it is possible for us to come to an agreement, to have a treaty agreed, to allow the UK to leave the EU in an orderly fashion, and have that done by the end of October," Varadkar said after meeting his UK counterpart.

The news sent the British pound sharply higher against the dollar, with the currency approaching $1.25 early Friday in London. UK stocks posted early gains too.

The big picture: There are still a hundred ways for Brexit talks to go wrong. Much depends on the question of the Irish border — and the proposed "backstop" — which has become the most intractable issue in negotiations.

Even if Johnson secures an agreement, he still has to get the deal through the UK parliament. His predecessor, Theresa May, repeatedly tried and failed to do just that.

Next steps: The EU's chief Brexit negotiator, Michel Barnier, is meeting his British counterpart Steve Barclay in Brussels on Friday.

The world is still awash with oil

US crude oil prices shot up 1.75% on Friday after Iranian state media said a tanker belonging to its national oil company was hit and damaged by two missiles in the Red Sea.

The missiles were "possibly" fired from Saudi soil, Saheb Sadeghi, head of the public relations of the National Iranian Tanker Company, told state-run Press TV.

The report sparked worries of an escalation in the conflict between Iran and Saudi Arabia, and their proxies in the region.

Risk reaction: US crude is trading about $8 below last month's high caused by an attack on Saudi oil facilities that wiped out half of the country's production capacity.

Among the factors helping to keep prices lower: A rapid recovery in Saudi output, weaker demand for crude, and a buildup in stocks.

The International Energy Agency on Friday downgraded its forecast for demand growth for this year and next. It also said that OECD commercial stocks in August increased for the fifth consecutive month and are now close to the record 3+ billion barrels level maintained for most of 2016 just after prices crashed.

The electric future

Dyson has abandoned its plan to build electric cars, saying the project aimed at taking on the biggest names in the automotive industry is not commercially viable.

The maker of vacuums and hand dryers said that while its engineers had produced a "fantastic" vehicle, the $3 billion effort would be wound down after Dyson tried but failed to find a buyer.

The project had been a source of curiosity among industry veterans, some of whom questioned whether a company with substantial engineering experience — but none with cars — could compete with established carmakers.

Hubris or hope? The project may have been a long shot, but it's notable that Dyson tried in the first place. Traditional automakers have huge resources at their disposal — Volkswagen for example has 665,000 employees and annual revenue of $265 billion.

Yet the success of Elon Musk's Tesla shows that determined engineers with the right ideas and timing can disrupt the big boys.

Up next

The University of Michigan consumer sentiment report for October is out at 10:00 a.m. ET.

Also today:

  • US export and import prices for September