Most Asian markets extended their gains on Tuesday, buoyed by sustained investor optimism following the recent U.S.-China agreement to mutually reduce tariffs. The deal has raised hopes that the world’s two largest economies may step back from escalating a "trade war" that has cast a shadow over global markets in recent months.

Financial reports today indicated that Singapore’s Straits Times Index rose by 1.53% during its opening session after a holiday (Vesak Day) on Monday. Meanwhile, the broader MSCI Asia-Pacific ex-Japan Index climbed to its highest level in six months.

Malaysia’s stock market opened with a strong wave of buying as local investors sought to catch up with global markets following the U.S.-China trade agreement announcement. The benchmark Malaysian index resumed trading after a long weekend, surging by 14.89 points (nearly 1%) amid improved investor sentiment. The FBM KLCI is now trading at its highest level since early March.

Japan’s Nikkei 225 jumped 2%, reaching its highest point since February 25, while Taiwan’s tech-heavy index posted a similar gain. In China, stocks saw modest morning gains, with markets in Shanghai, Sydney, Seoul, Wellington, and Manila posting mixed advances. However, Hong Kong’s Hang Seng Index fell over 1% after surging 3% the previous day.

U.S. Markets and Tariff Adjustments

Reports also highlighted the strong performance of U.S. markets, where the S&P 500 rose over 3%, the Nasdaq surged 4.3%, and the Dow Jones Industrial Average gained 2.8%. Chinese stocks listed in the U.S. soared more than 5%.

The U.S. Treasury Department announced a reduction in tariffs on Chinese imports from 14.5% to 3%, while China’s Commerce Ministry reciprocated by lowering duties on U.S. goods from 12.5% to 10%. The agreement, set for an initial 90-day period, aims to create a more stable negotiation environment.

According to a Fitch Ratings report, the average effective U.S. tariff rate has dropped to 13.1% from 22.8% before the deal. However, this remains the highest rate since 1941, far exceeding the 2.3% average at the end of 2024.

Analysts Warn of Lingering Uncertainty

While markets have responded positively to the U.S.-China deal, economists caution that uncertainty persists over what follows the cooling-off period—particularly with some tariffs still in place and both sides needing to resolve deeper structural issues.

Investors are now expected to shift focus to the trade deal’s specifics and upcoming U.S. inflation data, which will serve as a key indicator for the Federal Reserve’s monetary policy direction.