Asian stock markets pared early gains in afternoon trading on Tuesday as investors grew increasingly concerned about the possibility of a resumption of the US-China trade war.
A 10 percent tariff imposed by US President Donald Trump on goods imported from China took effect at 14:01 Japan time. Trump said Asia’s largest economy is not doing enough to rebalance trade with the US and fight illegal drug trafficking.
China’s Finance Ministry said the country would impose retaliatory tariffs on US imports from February 10.
A White House spokesperson said earlier that a phone call between Trump and Chinese President Xi Jinping could take place in the next few days.
While the recent escalation in US-China trade tensions damaged investor sentiment in Asia, Trump announced that he would suspend tariffs on Mexico and Canada for a month.
Japan’s benchmark Nikkei Stock Average rose 672.42 points, or 1.7%, to 39,192.51 in the morning hours from the previous day, but then gave back some of these gains as investors heard little news on the progress of US-China talks. The index closed the day up 278.28 points, or 0.72 percent, at 38,798.37. The Nikkei average fell 1,052.40 points, or 2.7 percent, on Monday.
Elsewhere in Asia, Hong Kong stocks lost momentum in the afternoon after China announced a package of retaliatory steps against US tariffs. The Hang Seng Technology Index, which ended the morning session up more than 5 percent, saw its gains slow to 1.87 percent eight minutes after the start of afternoon trading. Semiconductor Manufacturing International Corp. and electric vehicle manufacturer Xpeng Auto are among the winners.
South Korea’s benchmark index KOSPI trimmed its gain to 1.1 percent after rising 2.2 percent in the morning.
In Taiwan, the Taiex’s gains slowed to 0.4% after the index rose 1.1% at one point, erasing most of the recovery from Monday’s 3.5% drop. Taiwan’s stock market reopened on Monday after the Lunar New Year holiday that began on January 22. Monday’s loss may have been exacerbated by the emergence of DeepSeek, China’s generative artificial intelligence, which other markets had already priced in last week.
