Chinese authorities are reportedly in possession of F-35 stealth fighter parts after components of the aircraft were “inexplicably diverted to Hong Kong.”

Shipping giant UPS was sending a cockpit canopy and weapons bay door to the U.S. from Australia in late May when it was diverted, Bloomberg reported on Thursday, citing sources.

Both parts were coated with a radar absorbing material that enhances their stealth capabilities, the sources said, and it was not clear why the shipment was diverted to Hong Kong.

On Tuesday, Australian Defense Minister Richard Marles told reporters Tuesday that Australia was aware of the shipment, and was working with the U.S. and Lockheed Martin to see how Canberra can assist in the investigation.

Marles also said it was his understanding that no sensitive parts were in the missing shipment, according to CNN.

Lockheed Martin, UPS and the Pentagon didn’t immediately respond to requests for comment from CNBC.

The F-35 is a fifth-generation stealth fighter made by Lockheed Martin, and Washington controls the sale of these aircraft only to its closest partners and allies.

For example, Turkey was excluded from the F-35 program in 2019 after the country purchased the Russian S-400 anti-aircraft system, which raised fears that the Russian system could be used as an intelligence collection platform to learn about the aircraft’s capabilities.

China has targeted F-35-related U.S. military data in past espionage cases, according to U.S. prosecutors in 2024.

A $24 billion sale of F-35s to Saudi Arabia was approved last week, but some lawmakers in Congress have already expressed concerns over the technology finding its way into Chinese hands.

Congressman Raja Krishnamoorthi (D-IL) said that the U.S. intelligence community has warned that the sale “could put the crown jewels of American military technology within reach of the Chinese Communist Party.”

Users of the fighter jet include Australia and Belgium, as well as the U.S. itself, with other countries like Japan, Canada and Singapore having also ordered the aircraft.

F-35s have also been used by the U.S. during the Iran conflict, with one aircraft suffering damage from enemy fire, according to the Department of Defense.

Oil prices dropped on Friday after a report emerged that U.S. and Iranian negotiators meeting in New York are exploring a step‑by‑step agreement to resolve the confrontation in the Persian Gulf.

November Brent crude futures slipped 1% to $93.66 a barrel, while U.S. West Texas Intermediate November futures fell 0.68% to $105.86 per barrel.

According to Reuters, a senior Iranian official said the most realistic way forward is for Tehran to permit shipping through the Strait of Hormuz if the United States ends its naval blockade.

The United States and Iran had previously agreed to this approach under a June 17 memorandum of understanding, but the arrangement soon broke down and fighting resumed. It remains unclear what distinguishes the present talks from earlier attempts.

Iran now seeks a return to the June 17 memorandum of understanding before the upcoming U.S. midterm elections, Iranian President Masoud Pezeshkian told media outlets on the sidelines of the United Nations General Assembly, according to Al Jazeera.

“It is understood that the two sides have been communicating via mediators,” said David Morrison, a senior market analyst at Trade Nation. Morrison added that investors remain uneasy about persistent inflation, rising energy costs, and the bellicose rhetoric exchanged by the U.S. and Iran at the UN General Assembly in New York.

The U.S. and China have extended a truce to keep tariffs lower for longer and rare earths flowing, U.S. Treasury Secretary Scott Bessent said Wednesday local time.

He was speaking on Fox News, as Chinese President Xi Jinping landed in Washington, D.C. for a state visit through Friday.

Xi and Trump agreed to a one-year trade truce at a meeting in South Korea last October. The deal, which was set to expire in November, will now be extended to Jan. 10, Bessent said. He added that Beijing needs to fulfill more deliverables.

Ahead of this week’s summit, many had expected the truce would be extended by six months or longer.

The U.S. and China should discuss their differences on trade issues on the basis of mutual benefit, without actively imposing restrictions, said Dong Shaopeng, senior researcher at Renmin University of China. He expected the trade truce could be continually improved and extended.

Chinese state media did not immediately note Bessent’s comments on the trade truce.

The two-month extension “suggests to me the U.S. is unsatisfied with China’s offers and wants to keep the heat on, with a bonus being it is more likely that Xi goes to the G20 in Miami,” said Scott Kennedy of the U.S.-based think tank Center for Strategic and International Studies.

Trump visited Beijing in May. The two leaders could also meet alongside an APEC meeting in Shenzhen in November, and the G20 summit in Miami in December.

However, Jens Eskelund, president of the European Chamber of Commerce in China, pointed out that simply extending the trade truce does not address challenges companies face, including the lack of a standardized approach to apply for rare earths export licenses.

Xi said in an official readout for his arrival that he is confident the visit will produce “fruitful results” for both sides. He said the two countries should be partners, not rivals, and work to build a stable relationship where competition and differences are managed. The readout did not mention tariffs, rare earths or artificial intelligence.

Footage streamed on China’s state broadcaster showed U.S. President Donald Trump and First Lady Melania Trump meeting Xi and First Lady of China Peng Liyuan at the foot of the Chinese leader’s jet. The video did not show the U.S. and Chinese leaders shaking hands — it focused on Xi and his wife shaking hands with two children presenting them each with bouquets.

After greeting Xi, Trump told reporters he would discuss the Iran war with the Chinese leader, among “many other subjects.”

Bessent met with Chinese Vice Premier He Lifeng in New York ahead of Xi’s arrival in the U.S. The two sides discussed setting up an alert system for AI incidents, according to Bessent.

While executives of major U.S. tech companies plan to join a summit dinner on Thursday, none of their Chinese counterparts are expected to attend.

Politburo Standing Committee Member Cai Qi and China’s top diplomat Wang Yi accompanied Xi, according to state media.

—CNBC’s Eunice Yoon and Ashlee Trujillo contributed to this report.