Asian markets rise as inflation and trade with China come into focus

Tuesday saw gains in Asian markets, somewhat offsetting previous losses as traders watched for additional indications of a possible trade conflict between China and the West. Inflation data was also a major concern.

Following three days of sharp losses, Chinese markets began to steady as discussions over import taxes on Chinese electric vehicles between European and Chinese ministers commenced. However, feelings towards the nation remained brittle.

The Wall Street that closed mostly down due to losses in heavyweight chipmaking firms provided mixed signals to regional markets. Asian trading saw a sideways movement in US futures.

This week's main focus was on the Federal Reserve's favoured inflation indicator, the PCE price index data, which is expected to influence the forecast for U.S. interest rates.

Broader Asian markets were muted owing to expectations of the inflation report, and overall gains were further constrained by losses in technology sectors.

Hong Kong's Hang Seng index increased by about 1%, while China's Shanghai Shenzhen CSI 300 and Shanghai Composite indices increased by 0.1% apiece. Following China's warning of a trade war with the EU over increased import levies on Chinese electric vehicles, all three of the indices saw sharp losses in recent sessions.

Ministers from China and Germany were observed conversing about lowering or maybe eliminating the duties, which are scheduled to take effect in July.

However, Canada was observed mulling to join the US and the EU by imposing restrictions on Chinese EV imports. A move like this might worsen the already tense ties between China and the West.

In recent sessions, sentiment towards Asia has been significantly impacted by concerns about China, particularly if the nation intensifies trade conflicts with other major countries.

Moreover, Japan's Nikkei 225 index saw rangebound trading due to declines in heavyweight tech firms.

This week's main focus was the approaching consumer price index inflation data from Tokyo, which is scheduled for release on Friday. The reading follows speculation of a July interest rate rise by certain Bank of Japan members, as revealed in the minutes of their most recent meeting.

Sentiment toward Japan was also on edge due to the yen's weakness, which might lead to government intervention.

(Sources: investing.com, reuters.com)