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The tariff dispute between the U.S. and China is more about strategic dominance than it is about trade, said Citibank's Asia Pacific regional head of investments.

"It's not something that's likely to go away just because of the meeting that's going to happen on Saturday," said Shrikant Bhat, Citibank's regional head of investments for Asia Pacific and Europe, Middle East and Africa.

He was referring to a much-anticipated meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit in Buenos Aires, Argentina.

However, Bhat added, any effort to douse tensions — such as the U.S. postponing higher tariffs on Chinese imports that were due to take effect in January — will be seen as positive news for the markets.

On Thursday, Asia markets traded higher ahead of the crucial meeting between the two leaders, which many are hoping would help ease trade tensions between the two economic powerhouses.

In the U.S., stocks rallied and bonds sold off, spurred by remarks from Federal Reserve Chairman Jerome Powell who said Wednesday he considers the central bank's benchmark interest rate to be near a neutral level.

"Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy — that is, neither speeding up nor slowing down growth," Powell said during a speech at The Economic Club of New York.

Some market watchers took his comments to mean the central bank could stop hiking rates sooner than it had previously signaled.

"There is definitely tailwinds here for the markets if this continues," said Bhat, referring to the Fed's indication of policy normalization.

Bhat said Powell's latest comments show he has neither committed to increasing or reducing interest rates, and that the Fed chairman "has kept the door open for a couple more hikes — that's not off the table as yet."