After a tense lead-up to the July 6 deadline for U.S. and China tariffs to take effect, markets will be watching for potential developments on the trade front. U.S. tariffs on $34 billion worth of Chinese goods from 818 product categories that took effect at 12:01 p.m. HK/SIN, while China implemented retaliatory tariffs on some imports from the U.S. in response, said a Reuters report.
The Chinese government said earlier this week that it would not "fire the first shot" in its trade dispute with the U.S.
Trump on Thursday said an additional $16 billion of Chinese products will be subject to tariffs in two weeks, also adding that he was considering more duties on $500 billion in Chinese goods.
What investors are most worried about is that the wave of tariffs on Friday won't mark the end of things, Liang Hong, chief economist at CICC, told CNBC's "Squawk Box." "Even if we have a temporary truce on this $50 billion total package, there are more [that could come], both on trade and investment on the bilateral relationship," she said.
Concerns about trade tensions between the U.S. and its trading partners, including China, spiraling into a trade war that could hurt economic growth have weighed on investor sentiment in Asia in recent sessions, with regional markets closing lower on Thursday.
Chinese equity markets have taken a knock in recent weeks, with the benchmark Shanghai composite wallowing in bear market territory since last week. CICC's Liang also attributed weakness in mainland stocks to tighter liquidity in markets there, although trade frictions have compounded nervousness.
U.S. stocks shrugged off the soggy session in Asia on Thursday to close higher. The Dow Jones Industrial Average rose 0.75 percent, or 181.92 points and the Nasdaq composite surged 1.12 percent. Europe also notched gains, with the pan-European Stoxx 600 finishing the session higher by 0.41 percent amid optimism that U.S. President Donald Trump could hold off on threats to slap tariffs on European cars.
Also of note, the Federal Reserve's latest minutes showed officials were concerned about letting the U.S. economy running too hot, as that could cause problems leading to a "significant economic downturn." Fed officials said the central bank should proceed with raising U.S. interest rates.
Following the release of U.S. private payrolls data that missed expectations on Thursday, investors are awaiting U.S. nonfarm payrolls due during U.S. hours.
In currencies, the dollar was mostly steady after slipping in the last session. The dollar index, which tracks the greenback against a basket of currencies, was last at 94.436. Meanwhile, the euro was stable for the most part after climbing overnight on the back of strong German data. The euro traded at 1.1687 at 11:56 a.m. HK/SIN after touching the $1.17 level on Thursday.