Early gains for MSCI’s broadest index of Asia-Pacific shares outside Japan dropped to trade flat

Asian stocks stumbled on Tuesday, as signs China and the U.S. were preparing for trade talks later this month were tempered by uncertainty over whether the two nations could strike a durable deal.

Early gains for MSCI’s broadest index of Asia-Pacific shares outside Japan dropped to trade flat. Markets had earlier joined the rebound from Monday’s cash session.

Global equities had abruptly turned red on Friday after U.S. President Trump announced 100% tariffs on China, reviving memories of the market volatility after April’s “Liberation Day” announcement.

Citi analysts wrote in a research report that they do not expect an escalation of trade tensions between Beijing and Washington.

The reason is not so much the reassuring President Trump tweet over the weekend, but the fact that China may be the only country with bargaining power, where the U.S. may have to be more flexible in its negotiation stance, they added.

But a spokesperson for China’s commerce ministry said on Tuesday the U.S. cannot seek talks while also making threats, keeping markets on edge over the chances for a broader trade deal.

After early gains in Hong Kong, the Hang Seng Index dropped 0.4%, while in the mainland, the CSI 300 gauge of blue-chip Chinese stocks slid 0.1%.

Asian stocks were led by a 0.8% surge in Taiwan’s market as TSMC rose to a record.

Kospi index added 0.6% after Samsung Electronics on Tuesday projected a 32% rise in third-quarter operating profit from a year earlier, beating analysts’ estimates as demand for conventional memory chips helped offset the company’s weaker high bandwidth memory chip sales.

Nikkei stock index dropped 1.2% as Japan’s markets reopened after a holiday.