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Investing.com — Asian stocks rose on Tuesday, recovering some of recent losses as investors awaited more signals about a potential trade war between China and the West, while the imprints of upcoming inflation were also in focus.
Chinese markets stabilized after three days of heavy losses, as Chinese and European ministers opened dialogue on tariffs on imports of Chinese electric cars. But sentiment toward the country remains fragile.
Regional markets received moderate signals from Wall Street, which ended significantly lower due to losses in shares of heavyweight chipmakers. US futures traded sideways in Asian trade.
The focus this week has been largely on upcoming data, which is the Fed’s preferred measure of inflation and is likely to take into account US interest rate expectations.
Inflation expectations kept broader Asian markets weak, while weakness in technology stocks also limited overall gains.
Chinese markets are stable, and trade tensions are in focus
China and its indices rose 0.1% each, while Hong Kong rose almost 1%. The three indices recorded sharp losses in recent sessions, after Chinese officials warned of a trade war with the European Union over new import duties on Chinese electric vehicles.
Chinese ministers were seen participating in a dialogue with German officials on the possibility of reducing or even raising tariffs, which are scheduled to be imposed from July.
But Canada has joined the United States and the European Union in imposing more tariffs on Chinese electric vehicles, a move that could further strain already strained relations between China and the West.
Concerns about China have been a major drag on sentiment towards Asia in recent sessions, especially if the country escalates trade tensions with other major economies.
Sentiments towards China were also affected by a Reuters report, which stated that the Biden administration is investigating major Chinese telecom companies over potential security concerns.
More inflation signals are awaited
The Japanese index rose 0.5%, although losses in heavyweight technology stocks kept the index trading in a largely limited range.
But the broader index rose 1.4 percent, supported by a recovery in economically sensitive stocks.
The focus this week has been on inflation data coming out of Tokyo, which is due on Friday. This reading comes after the minutes of the Bank of Japan’s latest meeting showed that some members are speculating about an interest rate hike in July.
Weakness in the Eurozone, which could attract government intervention, has also kept sentiment towards Japan on edge.
Among other Asian markets, Australia’s index rose 0.9%, supported by mining stocks as commodity prices rose. The focus was also on the country’s next report, which is due to be released on Wednesday.
A private poll showed slight improvement in Australia in June.
South Korea’s index added 0.4%, with larger gains hindered by losses in technology stocks.
India index futures pointed to a flat open as the index continued to face resistance near its recent record highs.
