Japan's benchmark Nikkei 225 rose to an all-time high of 42,942.14 as it jumped 2.6 per cent, triggered by Toyota Motor Corp.'s shares surging 3.3 per cent. Other heavyweight shares also saw big gains after US President Donald Trump announced a 90-day delay in imposing higher tariffs on China.
Asian shares mostly saw an uptick following the development, with Shanghai Composite edging up 0.3 per cent to 3,658.62 and South Korea's Kospi adding 0.6 per cent to 3,227.10.
It was only Hong Kong's Hang Seng that slipped nearly 0.2 per cent to 24,865.07.
On Monday, Trump signed an executive order to put on hold the levying of higher tariffs on China, which may have exceeded the current 30 per cent increase, leading to more tensions between the world’s two major economies.
Beijing would have most likely also responded by hiking retaliatory tariffs on US exports to China, but conceded to Trumps’ truce call and issued a similar statement about the extension of the tariff pause.
Also Read: US, China extend tariff truce by 90 days
There may be further talks on a possible deal, but the uncertainty clouding the world’s economy remains.
“The extension isn't about goodwill; it's about keeping oxygen in the room for deals that matter,” observed Stephen Innes of SPI Asset Management.
Elsewhere in Asia, Australia's S&P/ASX 200 was little changed, rising less than 0.1 per cent to 8,852.80.
On Monday, US stocks edged back from their record highs ahead of an update on US inflation. The S&P 500 dipped 0.3 per cent from its all-time high from two weeks ago, to settle at 6,373.45.
The Dow Jones Industrial Average dropped 0.5 per cent to 43,975.09, and the Nasdaq composite slipped 0.3 per cent to 21,385.40.
The US government will release data on inflation in July on Tuesday, which may rattle Wall Street.
While inflation in the US has come down from its peak of 9 per cent three years ago, it remains above 2 per cent. More worries may be in store surrounding Trump’s tariffs further pushing up prices.
That in turn is raising fears about a potential, worst-case scenario called “stagflation” where the economy stagnates but inflation remains high. The Federal Reserve has no good tool to fix both at once, and it would need to concentrate on either the job market or inflation first. But helping one of those areas by moving interest rates would likely hurt the other.
A top Fed official, Michelle Bowman, said on Saturday that she believes the job market is the bigger concern. She still believes there will be three cuts to interest rates announced by the Fed this year, especially after the poor US job market report that was weaker than expected.
Trump has been strongly vocal about the need for the Fed to cut interest rates to support the economy, a move that Fed officials, led by Chair Jerome Powell, are hesitant to make as they await to see more data that shows how Trump’s tariffs are affecting inflation.
Gold prices eased after Trump said he would not place tariffs on the metal. On Friday, the gold market was abuzz with speculation after the US Customs and Border Patrol seemed to rule that some kinds of gold bars coming from Switzerland would face a tariff. That caused a disconnect between the prices of gold trading in New York versus in London, but the market has since calmed.
Gold for December delivery settled at USD 3,404.70 per ounce in New York, down 2.5 per cent. Early Tuesday, it was down 0.1 per cent at USD 3,399.70.
Meanwhile, benchmark US crude rose 17 cents to USD 64.13 a barrel. Brent crude, the international standard, added 21 cents to USD 66.84 a barrel.
In currency trading, the US dollar edged up to 148.44 Japanese yen from 148.15 yen. The euro cost USD 1.1621, up from USD 1.1618.
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