(Sharecast News) - Asia-Pacific markets ended mixed on Wednesday as investors reacted cautiously to the unresolved outcome of US-China trade talks in Sweden.
While negotiations continued, no extension was announced for the existing tariff truce, and US officials reiterated that new duties scheduled for Friday remain on course unless president Donald Trump personally intervenes.
"Asian stocks saw a slight increase in relatively quiet trading following an agreement between China and the US to prolong their tariff truce," said TickMill market strategy partner Patrick Munnelly.
"The South Korean won outperformed other Asian currencies; the MSCI regional stock index gained, driven mainly by technology stocks.
"The dollar weakened against all its Group-of-10 counterparts, as the Federal Reserve is largely anticipated to keep interest rates steady on Wednesday."
Munnelly noted that the Korean won climbed after a report suggested the US pushed for currency improvements during trade discussions.
"President Donald Trump is expected to make a decisive judgement on whether to continue the tariff truce with China before it expires in two weeks - an extension that would indicate a further stabilisation of relations between the world's two largest economies.
"Similar to the muted reaction to the US-EU tariff agreement, the recent positive developments with Beijing resulted in only a minor rise in stock prices and did little to enhance investor confidence.
"Traders remain focused on several important upcoming events, including the Fed's decision and Friday's US employment report."
Markets mixed as trade developments roll on
In Japan, the Nikkei 225 slipped 0.07% to close at 40,647.50, weighed down by sharp losses in industrial and transport stocks.
Keyence dropped 4.76%, Komatsu fell 4.6%, and ANA Holdings declined 4.08%.
However, the broader Topix index managed a gain of 0.4% to 2,920.18.
Chinese equities were mixed - the Shanghai Composite edged up 0.17% to 3,615.72, led by gains in steelmakers such as Inner Mongolia BaoTou Steel Union, which rose 10.19%.
The Shenzhen Component fell 0.77% to 11,203.03, reflecting broader concerns in the tech sector.
Hong Kong's Hang Seng Index declined sharply by 1.36% to 25,176.93, dragged down by a steep sell-off in Li Auto shares, which plunged 12.84%.
Analysts cited investor disappointment over the company's new model lineup and lack of order transparency.
Hang Seng Bank also dropped 7.4%, while chipmaker SMIC shed 5.9%.
In South Korea, the Kospi 100 bucked the regional trend, rising 1.04% to 3,291.01.
Tech-related shares outperformed, with Samsung Electro-Mechanics surging 10.55% and Samsung SDI climbing 7.8%.
Australia's S&P/ASX 200 added 0.6% to finish at 8,756.40.
Healthcare and financial stocks were among the best performers, including Polynovo, which rose 7.76%, and Platinum Asset Management, up 4.51%.
In New Zealand, the S&P/NZX 50 dropped 0.62% to 12,855.97, pressured by losses in the logistics and dairy sectors.
Mainfreight tumbled 9.58%, while Synlait Milk slid 7.69%.
In currency markets, the dollar was last down 0.3% on the yen, trading at JPY 148.02, while it strengthened 0.18% against the Aussie to AUD 1.5390, and advanced 0.04% on the Kiwi, changing hands at NZD 1.6797.
Oil prices slipped amid uncertainty in global trade dynamics, with Brent crude futures last down 0.55% on ICE at $72.11 per barrel, while the NYMEX quote for West Texas Intermediate dropped 0.56% to $68.82.
Australian inflation eases in Q2, Singapore stands pat on monetary policy
In economic news, Australia's inflation rate eased in the second quarter to its lowest level in more than three years, reinforcing expectations that price pressures were moderating across the economy.
Data from the Australian Bureau of Statistics showed annual consumer price inflation slowed to 2.1%, down from 2.4% in the prior quarter and below the 2.2% forecast by economists.
Quarterly inflation came in at 0.7%, also under expectations and down from 0.9% in the first quarter.
Despite rising costs in housing, food, and healthcare, falling transport prices helped temper overall increases.
The reading brought inflation close to the lower bound of the Reserve Bank of Australia's 2 to 3% target range.
In Singapore, the central bank kept its monetary policy unchanged but signalled a slowdown in the economy during the second half of 2025.
The Monetary Authority of Singapore (MAS) said trade-related sectors were likely to weaken amid growing global uncertainty, particularly from tariff risks posed by US policy under president Donald Trump.
While the MAS maintained the slope and width of its currency policy band, it noted heightened risks for 2026, including potential tariff changes and geopolitical volatility that could further pressure Singapore's export-driven economy.
Meanwhile, hopes for an extension of the US-China tariff truce remain unresolved.
American officials said Tuesday that president Trump has not yet approved any deal to delay the implementation of new tariffs.
"He has final say on all the trade deals," Treasury secretary Scott Bessent told CNBC following talks in Sweden.
US trade representative Jamieson Greer added that negotiators would return to Washington to consult with the president on next steps.
The Stockholm meeting marked the third round of high-level discussions between the two countries since May.
Reporting by Josh White for Sharecast.com.
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