Japan, Hong Kong markets lead Asian stocks down

Hang Seng index dropped more than 1%, Nikkei 225 fell nearly 1%, the TOPIX index dropped 1%, S&P/ASX 200 inched 0.2% lower, while Straits Times Index fell 0.5%

Most Asian stock markets fell on Tuesday, led by declines in Japan and Hong Kong, as investors turned cautious ahead of the approaching U.S. tariff deadline and braced for key central bank decisions from the Bank of Japan and the Federal Reserve.

Investors weighed the recent trade framework between the U.S. and the European Union, but the agreement fell short of sparking the broader optimism that had been building ahead of its announcement.

Wall Street indexes saw muted moves on Monday, but the S&P 500 and Nasdaq still closed at new record highs. U.S. stock index futures were also steady in Asian trading on Tuesday.

A weekend trade framework between the U.S. and European Union set baseline tariffs on most EU imports at 15%, down from earlier threats of up to 30%or higher.

That deal initially buoyed global risk sentiment, but analysts cautioned that the tariff hike from historically low levels could weigh on global growth and inflation.

Meanwhile, U.S. and Chinese trade officials met in Stockholm on Monday in a third round of negotiations aimed at extending a May’s 90‑day pause on tariff escalation.

Even with visible trade progress, sentiment remains fragile as firms and investors weigh how higher baseline tariffs and uncertainty around the August 1 U.S. deadline may curb growth and margins.

Hong Kong’s Hang Seng index led losses, dropping more than 1% on Tuesday.

China’s Shanghai Composite and the Shanghai Shenzhen CSI 300 indexes traded largely unchanged.

Japan’s Nikkei 225 fell nearly 1% on Tuesday, deepening losses after a sharper drop in the previous session. The broader TOPIX index dropped 1%.

Bucking the regional trend, South Korea’s KOSPI rose 0.7% on hopes of a U.S. trade deal before the deadline.

Australia’s S&P/ASX 200 inched 0.2% lower, while Singapore’s Straits Times Index fell 0.5%.