Trade Tensions Tame Asian Stock Rally Amid Tariff Uncertainties

Asian stock markets lost momentum on Tuesday as concerns over U.S. President Donald Trump's trade policies resurfaced, impacting global economic stability. European futures signaled a weaker start, while Chinese stocks remained flat, contrary to Wall Street's strong rally following the announcement of a pause in the Sino-U.S. trade war.

Futures for the S&P 500 and Nasdaq fell during Asia's afternoon trading, reflecting market caution. Christopher Hodge, chief U.S. economist at Natixis, noted that despite a pause in tariffs, substantial economic growth may remain elusive due to continued high tariffs. The U.S. effective tariff rate is now 13.1%, a decrease from 22.8% but still high historically.

Attention now turns to U.S. inflation data and future trade relations between the U.S. and China, crucial for market sentiment. Signs of persistent uncertainty tempered enthusiasm, with traders adjusting their Federal Reserve rate cut expectations. The U.S.-China trade developments and inflation metrics will inform traders amid modestly rising Treasury yields.

(With inputs from agencies.)