Asia Markets

Stocks in Asia mostly turn around as US-China trade tensions take a breather

Key Points
  • Stocks in Asia were mostly higher, with Chinese shares gaining more than 1% by the close.
  • Investors cheered a reprieve in U.S.-China trade tensions surrounding Chinese telecommunications giant Huawei.

Stocks in Asia were mostly higher on Tuesday as a temporary reprieve in U.S.-China trade tensions provided a breather.

Mainland Chinese shares rose on the day, with the Shanghai composite gaining 1.23% to 2,905.97 and the Shenzhen component adding 1.92% to 9,087.52. The Shenzhen composite advanced 1.771% to 1,548.68.

Over in South Korea, the Kospi rose 0.27% to close at 2,061.25 as shares of Samsung Electronics surged 2.74% following earlier news of Google suspending business activity with Huawei.

Australia's was 0.37% higher to close at 6,500.10.

The last changed hands at $0.6877, off highs above $0.696 seen in the previous week. Australia's central bank will consider the case for lower interest rates at its June policy meeting, Governor Philip Lowe said on Tuesday.

Elsewhere in Asia, however, the Nikkei 225 in Japan lost 0.14% to close at 21,272.45. Shares of Tokyo Electron fell 1.88%. The Topix index also declined 0.3% to finish its trading day at 1,550.30.

The Hang Seng index in Hong Kong declined around 0.5%, as of its final hour of trading.

On Tuesday, the U.S. eased some restrictions on Huawei a day after Alphabet's Google suspended business with Huawei that involves transferring hardware, software and other technical services.

The U.S. search giant's decision followed last week's move by U.S. President Donald Trump's administration to add Huawei to a list that required U.S. companies get a license to do business with the Chinese company. Bloomberg News also reported that companies like Intel, Qualcomm and Broadcom will not supply Huawei until further notice.

That came as trade negotiations between Washington and Beijing hit a roadblock, CNBC reported last Friday.

One economist told CNBC on Tuesday that a "threshold has been breached" between the two economic powerhouses.

"Even if the Department of Commerce or anybody outside of White House sort of scales back some of these rhetoric that we've heard in the last few days, I don't think we can ever go back to square one," Taimur Baig, a managing director and chief economist at DBS Group Research, told CNBC's "Squawk Box" on Tuesday.

"The iron curtain has been raised," Baig said. "The breach of trust that the Chinese will never be able to rely 100% on input supplies from the U.S., I think, is permanent."

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.081 after touching an earlier low of 97.909. The traded at 110.12 against the dollar after seeing highs below 109.2 last week.

Oil prices increased in the afternoon of Asian trading hours. The international benchmark Brent crude futures contract rose 0.11% to $72.05 per barrel, while U.S. crude futures added 0.36% to $63.33 per barrel.

— Reuters and CNBC's Fred Imbert contributed to this report.