Asia-Pacific stock markets closed mixed on Tuesday as investors across the region reacted cautiously to ongoing trade negotiations involving the United States and several key Asian economies. The cautious mood was compounded by a rebound in the U.S. dollar and weaker regional currencies, as well as concerns over global interest rate trends.
Trade Talks and Tariff Hopes Spark Regional Interest in Asia
Markets have been watching closely as trade diplomacy heats up. India reportedly proposed zero tariffs on several key exports — including steel, pharmaceuticals, and auto components — on a reciprocal basis and within specified import volumes. The move is seen as a strategic effort to ease trade friction and secure favorable access to U.S. markets.
Meanwhile, Malaysia’s government confirmed that it is engaged in new discussions with the United States and hinted that Washington may agree to reduce some tariffs. U.S. Treasury Secretary Scott Bessent added fuel to investor optimism, telling CNBC on Monday that the U.S. is “very close to some deals.” President Donald Trump also said that multiple agreements could be finalized “as early as this week.”
The news helped boost some investor sentiment, especially as the region grapples with uncertainty from earlier tariff volleys and global inflationary pressures.
China Stocks Lead Gains as Asian Markets Reopen
Mainland Chinese markets reopened following the Labor Day holiday, and local equities showed resilience. The CSI 300 index rose 1.01%, closing at 3,808.54, its highest level since early April. Hong Kong’s Hang Seng Index also advanced, climbing 0.65% in late trading.
Despite the gains, China’s latest Caixin Services Purchasing Managers’ Index (PMI) data offered a mixed signal. The April reading came in at 50.7, marking a seven-month low, and reflecting slower expansion in the country’s vast service sector. In March, the PMI stood at 51.9.
Investors interpreted the drop in services activity as a sign that China’s post-pandemic recovery remains uneven, despite recent signs of policy easing and stronger export figures.
India and Australia Slip Amid Volatility
India’s key stock indices declined on Tuesday in a choppy trading session. The benchmark Nifty 50 dropped 0.33%, while the BSE Sensex slipped 0.29%, with investors reacting to trade uncertainties and foreign exchange fluctuations.
Over in Australia, the S&P/ASX 200 index finished flat at 8,151.40, as gains in mining and energy stocks were offset by weakness in the tech and banking sectors.
Japan and South Korea Markets Closed
Japanese and South Korean stock markets remained closed for public holidays, contributing to lighter trading volumes across the Asia-Pacific region.
U.S. Markets Pull Back as Fed Meeting Looms
Overnight in the U.S., the three major indices ended lower as Wall Street digested the latest trade headlines and looked ahead to the Federal Reserve’s upcoming policy meeting. The Fed is set to begin its two-day meeting on Tuesday, with a rate decision expected Wednesday.
The S&P 500 snapped its nine-day winning streak, falling 0.64% to 5,650.38, while the Nasdaq Composite lost 0.74%, closing at 17,844.24. The Dow Jones Industrial Average dipped 98.60 points, or 0.24%, ending at 41,218.83.
According to the CME Group’s FedWatch Tool, futures are pricing in just a 2.7% chance of a rate cut this week. Analysts largely expect the Fed to maintain its current stance.
Erik Weisman, Chief Economist at MFS Investment Management, noted that Fed Chair Jerome Powell is likely to adopt a “wait-and-see” approach amid ongoing uncertainty. “The chaos of U.S. tariff policy leaves the future macroeconomic landscape especially challenging,” he said in a note.
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