Asia-Pacific stock markets showed a mixed performance at Tuesday’s open, with investors assessing the record-setting gains on Wall Street while simultaneously keeping a wary eye on the global impact of US President Donald Trump’s tariff policies.
With a 90-day tariff reprieve set to expire next week, the delicate state of international trade negotiations remains a key focus. Indian benchmarks, including the Sensex, are poised for a flat start.
The backdrop for Asian trading was a record close for two of the three key benchmarks on Wall Street in Monday’s session.
The broad-based S&P 500 index gained 0.52% to end at 6,204.95, while the Nasdaq Composite advanced 0.47% to also reach a fresh all-time high of 20,369.73.
The Dow Jones Industrial Average climbed 275.50 points, or 0.63%, to settle at 44,094.77.
However, US stock futures ticked down in early Asian hours, suggesting a slight pause in the upward momentum.
Monday’s rally in the US was partly fueled by Canada’s decision to rescind its digital service tax, a move aimed at facilitating trade negotiations with Washington.
This came after President Donald Trump had stated last Friday that the US was “terminating ALL discussions on Trade with Canada.”
Initial payments on the now-rescinded tax were set to begin Monday and would have applied to US tech giants like Google, Meta, and Amazon.
Despite these positive developments, the looming expiration of Trump’s 90-day tariff reprieve continues to create uncertainty.
US Treasury Secretary Scott Bessent said on Monday that there are “countries that are negotiating in good faith.”
However, he also issued a stern warning, adding that tariffs could still “spring back” to the levels announced on April 2 “if we can’t get across the line because they are being recalcitrant.”
Regional market performance: a divergent picture
This mix of positive momentum and underlying caution was reflected in Tuesday’s Asian trading.
Japan’s Nikkei 225 benchmark fell 1.1% after hitting an over 11-month high in its previous session, with the broader Topix index declining by 0.82%.
In contrast, South Korea’s Kospi index rose a strong 1.71%, while the small-cap Kosdaq added 0.66%. Over in Australia, the S&P/ASX 200 increased by a modest 0.18%.
Mainland China’s CSI 300 started the day 0.16% lower, even as the country’s Caixin/S&P Global manufacturing purchasing manager’s index (PMI) for June came in at 50.4, higher than the 49 predicted by analysts polled by Reuters and indicating expansion.
Hong Kong markets were closed for a public holiday.
Japan’s manufacturing sector shows tentative growth
Delving deeper into the Japanese data, manufacturing activity in the country rose in June for the first time in 13 months, primarily on the back of higher output.
A private sector survey released on Tuesday showed the au Jibun Bank flash Japan Manufacturing Purchasing Managers’ Index rising to 50.4 in June.
This figure came in above the 50-point mark that separates growth from contraction for the first time since May 2024, and also surpassed the 49.4 reading seen in May.
However, underlying demand remained weak, as new orders and export sales continued to decline.
“The latest PMI data signalled that demand conditions remained challenging for Japanese manufacturers in June, with firms recording further drops in sales both at home and overseas,” Annabel Fiddes, economics associate director at S&P Global Market Intelligence, wrote in a Tuesday note.
“We will need to see a renewed and sustained improvement in customer demand, which remains dampened by ongoing uncertainty regarding US tariffs, in order to see a sustained recovery in production,” she added.
Indian markets poised for flat opening after profit booking
Indian stock market benchmark indices, the Sensex and Nifty 50, are likely to open flat on Tuesday, tracking the mixed cues from other global markets.
The trends on Gift Nifty also indicated a flattish start, with Gift Nifty trading around the 25,630 level, a premium of nearly 15 points from Nifty futures’ previous close.
This follows a session on Monday where the domestic equity market’s four-day gaining streak came to an end, with indices closing lower amid apparent profit booking.
The Sensex had dropped 452.44 points, or 0.54%, to close at 83,606.46, while the Nifty 50 settled 120.75 points, or 0.47%, lower at 25,517.05.
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