Asia shares down as investors weigh fragile China-U.S. truce

Markets in Seoul led losses, with the KOSPI dropping after a sharp record rally in recent weeks

Asian shares were mostly subdued on Tuesday as investors assessed a fragile China-U.S. trade truce and weighed renewed technology tensions, while stocks in Sydney remained lower after the Reserve Bank of Australia (RBA) held interest rates unchanged.

Markets in Seoul led losses, with the KOSPI dropping after a sharp record rally in recent weeks.

The RBA left interest rates unchanged at 3.60% on Tuesday as policymakers weighed a recent rise in inflation against signs of a recovering economy and lingering global uncertainty.

Traders parsed the central bank’s statement for hints on when rate cuts could begin in 2026, though the RBA provided little insight.

The central bank adopted a cautious stance due to price pressures, adding that the labour market still remains a “little tight.”

S&P/ASX 200 index held 0.7% losses after the decision, as the move was largely priced in.

Blue chip Shanghai Shenzhen CSI 300 dropped 0.5%, while the Shanghai Composite index slipped 0.3%.

Hang Seng index was largely unchanged.

Nikkei 225 declined 0.5% on Tuesday after returning from a holiday, while the broader TOPIX index was muted.

KOSPI led losses, shedding nearly 2% after hitting record highs in the previous session.

Straits Times index was little changed.

Meanwhile, Chinese Ambassador to the US Xie Feng urged Washington to respect Beijing’s “red lines” following the recent Trump-Xi summit in South Korea, where both leaders agreed on a one-year truce and to resume high-level dialogue on trade, technology, and security.

Xie said the deal had “recalibrated” relations but warned that tensions could easily flare if core Chinese interests – including Taiwan and human rights – were challenged.

U.S. President Donald Trump said on Monday that Nvidia’s most advanced Blackwell chips would be reserved for domestic use.

Investors remained cautious about the durability of the truce, noting that fundamental disagreements between the world’s two largest economies remain unresolved.