Asia Pacific markets mostly rose on Tuesday, following gains on Wall Street overnight as investors remain unfazed by China's retaliatory actions against the United States. But Chinese mainland markets gave up gains in the afternoon.
The Nikkei 225 advanced 1.88% to 22,750.24 and the Topix index was up 2.54% at 1,585.96 as the Japanese market returned to trading following a public holiday on Monday.
The Hang Seng index in Hong Kong was up 1.92% in late-afternoon trade but the new technology index slid 1.01%.
Chinese mainland shares gave up earlier gains to finish lower: The Shanghai composite fell 1.15% to 3,340.29, the Shenzhen component was lower by 1.4% to 13,466.27 and the Shenzhen composite lost 1.49% to 2,243.45.
In economic news, Singapore's GDP contracted by 42.9% in the second quarter of 2020 compared to the previous quarter. That sent the Southeast Asian country into a technical recession as large parts of the economy were shut down in early April to slow the spread of coronavirus.
Singapore's Straits Times index gave up earlier gains to trade down 0.44% as of 3:31 p.m. HK/SIN.
"Headline risks dominate amid lingering US fiscal uncertainties and rising US-China tensions," Vishnu Varathan, head of economics and strategy for Asia and Oceania treasury department at Mizuho Bank, said in a note.
"But markets appear to have a rather low bar in terms of expectations," he added.
The session in Asia followed Monday gains on Wall Street where the 30-stock Dow Jones Industrial Average rose about 350 points in regular trading, posting its seventh positive session in a row — its longest winning streak since September 2019. The S&P 500 gained 0.2%, sitting just 0.9% below its record high set in February. Meanwhile, the Nasdaq underperformed with a 0.4% loss as investors rotated out of some of the high-fliers.
Reports said China imposed sanctions on 11 U.S. citizens that included Senators Ted Cruz, Marco Rubio, Tom Cotton, Josh Hawley and Pat Toomey. The move from Beijing followed after Washington last week said it will impose sanctions on 11 individuals including Hong Kong leader Carrie Lam for her role in overseeing and "implementing Beijing's policies of suppression of freedom and democratic processes."
The U.S. lawmakers sanctioned by Beijing have been vocal critics of a new security law that China imposed on Hong Kong, strengthening its hold over the city.
Varathan explained that an "all out confrontation" was averted as China abstained from any sanction aimed at White House officials.
China's action on Monday "did little to shake risk sentiment, with any initial nervousness caused by the move quickly unwound," said Felicity Emmett from ANZ Research in a morning note.
"More pertinent is the meeting at the end of the week between key US and Chinese trade officials on a progress report on the phase 1 trade deal, though here the strong sense is that the Trump administration won't want to jeopardise the deal this side of the election for fear of alienating the important mid-West farming constituency," Ray Attrill, head of foreign-exchange strategy at the National Australia Bank, added in a morning note.
U.S. stock futures pointed to gains when markets open on Tuesday.
The U.S. dollar index, which measures the greenback against a basket of its peers, traded at 93.655 at 3:32 p.m. HK/SIN, coming off an earlier high around 93.724. The Japanese yen, also a safe-haven currency, changed hands at 106.17 against the dollar, weakening fractionally from levels near 105.30 in the previous week.
Meanwhile, the Australian dollar rose 0.29% to $0.7170.