Investing.com — Asian stocks rose on Tuesday, recovering some of their recent losses as investors await further indications of a potential trade war between China and the West, while also keeping an eye on upcoming inflation data.
Chinese markets stabilized after three days of sharp declines after Chinese and European ministers began talks over import tariffs on Chinese-made electric cars, but sentiment towards China remains fragile.
Regional markets were moderately affected by Wall Street, which ended sharply lower on losses in semiconductor giants. U.S. stock futures were flat in Asian markets.
Attention this week was mainly on upcoming data from the Federal Reserve’s preferred inflation gauge, which is likely to influence the outlook for U.S. interest rates.
Inflation expectations dragged down Asian markets broadly, while weakness in tech stocks also capped the overall gains.
Chinese market stable, attention on trade tensions
The China and Hong Kong indexes rose 0.1% each, with the Hong Kong index jumping nearly 1%. All three indexes had posted sharp losses in recent trading after Chinese officials warned of a trade war with the EU over new import tariffs on Chinese-made electric vehicles.
Chinese ministers were seen holding talks with German officials about potentially lowering or eliminating tariffs, which are due to be introduced from July.
But Canada appears to be considering joining the US and EU in restricting imports of Chinese-made electric vehicles, a move that could further strain already tense relations between China and the West.
Concerns about China have weighed on sentiment towards Asia in recent sessions, especially if China escalates trade tensions with other major economies.
A Reuters report that the Biden administration is investigating major Chinese telecommunications companies over security concerns also exacerbated sentiment toward China.
Further signs of inflation await
Japan’s stock index rose 0.5%, but was kept broadly range-bound by declines in major technology stocks.
However, the overall index rose 1.4%, supported by a rebound in cyclical stocks.
The focus this week was on inflation data from Tokyo due to be released this Friday. The data was released after minutes of the Bank of Japan’s latest meeting showed some members expect an interest rate hike in July.
Weakness in the , which could invite government intervention, also kept anti-Japanese sentiment tense.
Elsewhere in Asia, Australian shares rose 0.9 percent, helped by a boost in mining shares on rising commodity prices, with the country also eyeing new product launches on Wednesday.
Private surveys showed Australia improved slightly in June.
South Korea rose 0.4%, but a drop in tech stocks limited any bigger gains.
Indian equity index futures suggested a flat open as they continued to face resistance near recent record highs.
