Asian stock markets generally experienced a pullback: the favourable information from the US-Japan-Europe tariff protocol has faded, and the market is focusing on the China-US trade negotiations and the Fed's decision.

On Tuesday, Asian stock markets were generally under pressure as optimism regarding the tariff protocol framework recently reached between the Trump administration and Japan and the European Union gradually faded. Investors turned cautious after a week of intensive policy changes, with the Nikkei 225, Hang Seng Index, and Shanghai Composite Index all recording falls. Market focus has shifted to the high-level trade negotiations between China and the U.S. taking place in Sweden and the upcoming Fed interest rate decision. U.S. stocks performed flat overnight, with the S&P 500 slightly rising to set a new high, as the collaboration between TSL and Samsung's chips boosted related stocks.

Asian Markets: Protocol Benefits Fade, Regional Indices Generally Close Lower After experiencing a brief rise last week due to the favorable tariff agreement between the US and Japan, as well as the US and Europe, Asian stock markets generally corrected on Tuesday, as investors were uncertain about the details of the agreement and its sustainability:

• Nikkei 225 Index: fell 0.88%, closing at 40,636.17 points.
• Australia S&P/ASX 200 Index: fell slightly by 0.13%, closing at 8,686.20 points.
• KOSPI Index in South Korea: After fluctuating during the day, it barely closed up (rise less than 0.1%), at 3,212.59 points.
• Hang Seng Index: fell 1.1%, closing at 25,276.36 points.
• Shanghai Composite Index: fell 0.3%, closing at 3,586.93 points. The market trading is generally light, and investors are digesting mixed signals and reassessing risks.

Core Focus: Progress of China-U.S. Trade Negotiations and Fed Interest Rate Decision The current market is highly focused on two major events:

1. China-US High-Level Consultations: Chinese Vice Premier Liu He held talks with US Trade Representative Scott Beattie this week in Sweden, aiming to ease trade frictions. Beattie hinted that current tariff levels may be maintained, and no significant breakthroughs were achieved on the first day of negotiations. This round of consultations is one of a series of high-level dialogues between the two sides aimed at resolving conflicts.
2. Fed Interest Rate Decision: The Fed will announce its latest interest rate decision on Wednesday. The market generally expects it to keep rates unchanged and delay the timing of the first rate cut until September. Although some committee members nominated by Trump may pressure for early action, the central bank has remained inactive throughout the year after several rate cuts at the end of 2024.

Protocol Review: The Boosting Effect of the US-Japan-Europe Tariff Framework Weakens Last week's policy dynamics briefly boosted the market:

• US-Japan Protocol: Trump announced a framework for imposing a 15% tariff on Japanese imported goods (lower than the previously threatened 25%), and Japan promised to invest $550 billion in the US economy and expand market access for American automakers and rice exporters.
• US-EU Protocol: The United States agrees to impose a 15% tariff on goods such as automobiles from the European Union (which is also lower than the previously threatened level). However, due to the lack of specific implementation details in both protocols, their market boosting effect is difficult to sustain.

Overnight US Stocks: Sideways Trading, Chip Stocks Boosted by Cooperation News U.S. stocks performed relatively flat on Monday:

• S&P 500 Index: up by less than 0.1%, closing at 6,389.77 points, marking a new closing high for the sixth consecutive trading day.
• Dow Jones Industrial Average: fell slightly by 0.1%, closing at 44,837.56 points.
• Nasdaq Composite Index: rose 0.3%, closing at 21,178.58 points. Sector Highlights: AI and Chip Stocks
• Tesla CEO Musk announced a potential chip supply protocol with Samsung worth over $16.5 billion, pushing Tesla's stock price to rise by about 3%, while Samsung's stock in Seoul also surged by 6.8%.
• Driven by the aftermath of Google parent company Alphabet's $85 billion AI investment plan and positive industry sentiment, AMD rose 4.3%, and Super Micro Computer( surged 10.2%.

Commodities and Forex: Oil prices remain stable, and the US dollar rises slightly against the Japanese yen

• Crude Oil: U.S. WTI crude oil futures rose by 1 cent to $66.72 per barrel; international benchmark Brent crude oil futures increased by 6 cents to $70.10 per barrel.
• Forex: The US Dollar against the Japanese Yen slightly rose to 148.56 (previously 148.54); the Euro against the US Dollar edged up to 1.1600 (previously 1.1593).

Conclusion: The adjustment in the Asian market reflects investors' reassessment of the actual effectiveness of recent trade agreements, as well as a cautious attitude towards the deadlock in China-U.S. negotiations and the uncertainty of Fed policies. U.S. stocks maintain high volatility ahead of key resolutions, with the AI and chip sectors performing outstandingly under specific cooperation news stimulation. In the short term, the wording of the Fed's interest rate decision statement, the follow-up progress of China-U.S. negotiations, and the clarification of details regarding agreements between the U.S., Japan, and Europe will become key catalysts driving the direction of global stock markets. Traders should be wary of the potential volatility risk of the "buy the expectation, sell the fact" scenario after the resolution.