Investing.com – Asian shares rose on Tuesday, reversing some of their recent losses as investors awaited more signals about a potential trade war between China and the West, while upcoming inflation figures were also in focus.
Chinese markets stabilized after three days of sharp losses as Chinese and European ministers began dialogue on import tariffs on Chinese electric vehicles. But attitudes towards the country remained fragile.
Regional markets responded to lackluster signals from Wall Street, which ended mostly lower due to losses in shares of major chipmakers. American futures are trading sideways in Asian trading.
Much of the focus this week has been on the upcoming data, which is the Federal Reserve’s preferred indicator of inflation and will likely influence the outlook for US interest rates.
Expectations of rising inflation kept broader Asian markets in check, while weakness in technology stocks also capped overall growth.
Chinese markets stabilize as trade tensions take center stage
China’s index and indices each rose 0.1%, while Hong Kong’s index rose nearly 1%. All three indices recorded sharp losses in recent sessions after Chinese officials warned of a trade war with the EU over new import tariffs on Chinese electric vehicles.
Chinese ministers were seen holding dialogue with German officials over the potential reduction or even elimination of tariffs due to be introduced from July.
But it has been noted that Canada is considering limiting imports of Chinese electric vehicles and joining Canada with the US and EU. Such a move could further worsen already tense relations between China and the West.
Concerns about China have been a key factor influencing sentiment toward Asia in recent sessions, especially if the country escalates trade tensions with other major economies.
Sentiment toward China was also dampened by a Reuters report that said the Biden administration was investigating major Chinese telecom companies for potential security issues.
New inflation signals expected
Japan’s index rose 0.5%, although a decline in technology heavyweights left the index trading mostly in a range.
But the broader index rose 1.4%, helped by a recovery in economically sensitive stocks.
This week the focus has been on the upcoming inflation data from Tokyo, due out this Friday. The data comes after minutes from the Bank of Japan’s latest meeting showed some members were speculating about an interest rate hike in July.
Eurozone weakness, which could lead to government intervention, also contributed to strained sentiment toward Japan.
Among other Asian markets, Australia rose 0.9%, supported by mining shares as commodity prices rose. Attention was also focused on upcoming events in the country due to take place on Wednesday.
A private survey showed the situation in Australia improved slightly in June.
South Korean shares added 0.4%, with larger gains tempered by losses in technology stocks.
Indian index futures are pointing to a neutral open as the index continues to face resistance near recent record highs.