Asian shares gain as investors keep an eye on China-US trade talks

Asian shares were mostly higher on Tuesday as investors kept an eye on China-US trade talks that might help stave off a recession.

A second day of talks was planned after US and Chinese officials met in London for negotiations over various issues. The hope is that they can eventually reach a deal to reduce painfully high tariffs against each other. Most of the tariff hikes imposed since US President Donald Trump escalated his trade war are paused to allow trade in everything from tiny tech gadgets to enormous machinery to continue.

In Asian trading, Tokyo's Nikkei 225 gained 1 per cent to 38,473.97, while the Kospi in South Korea jumped 0.9 per cent to 2,881.40.

Hong Kong's Hang Seng edged 0.2 per cent higher, to 24,242.03 and the Shanghai Composite index was up 0.1 per cent at 3,403.51. In Taiwan, the Taiex surged 2 per cent.

Australia's S&P/ASX 200 advanced 0.7 per cent to 8,578.50.

On Monday, the S&P 500 edged up just 0.1 per cent and at 6,005.88 is within 2.3 per cent of its record set in February. The Dow Jones Industrial Average slipped by 1 point, which is well below 0.1 per cent, to 42,761.76.

The Nasdaq composite added 0.3 per cent to 19,591.24.

Hopes that President Donald Trump will lower his tariffs after reaching trade deals with countries around the world have helped the S&P 500 has rally back after it dropped roughly 20 per cent from its record two months ago. It's back above where it was when Trump shocked financial markets in April with his wide-ranging tariff announcement on what he called Liberation Day.

Some of the market's biggest moves came from the announcement of big buyout deals. Qualcomm rallied 4.1 per cent after saying it agreed to buy Alphawave Semi in a deal valued at $2.4 billion. IonQ, meanwhile, rose 2.7 per cent after the quantum computing and networking company said it agreed to purchase Oxford Ionics for nearly $1.08 billion.

On the losing side of Wall Street was Warner Bros. Discovery, which flipped from a big early gain to a loss of 3 per cent after saying it would split into two companies. One will get Warner Bros. Television, HBO Max and other studio brands, while the other will hold onto CNN, TNT Sports and other entertainment, sports and news television brands around the world, along with some digital products.

Tesla recovered some of its sharp, recent drop. The electric vehicle company tumbled last week as Elon Musk's relationship with Trump broke apart, and it rose 4.6 per cent Monday after flipping between gains and losses earlier in the day.

The frayed relationship could end up damaging Musk's other companies that get contracts from the US government, such as SpaceX. Rocket Lab, a space company that could pick up business at SpaceX's expense, rose 2.5 per cent.

In the bond market, the yield on the 10-year Treasury eased to 4.48 per cent from 4.51 per cent late Friday. It fell after a survey by the Federal Reserve Bank of New York found that consumers' expectations for coming inflation eased a bit in May.

Economists expect a report coming on Wednesday to show inflation across the country accelerated last month to 2.5 per cent from 2.3 per cent.

The Fed has been keeping its main interest rate steady as it waits to see how much Trump's tariffs will raise inflation and how much they will hurt the economy. A persistent increase in expectations for inflation among US households could drive behavior that creates a vicious cycle that only worsens inflation.

In other dealings early Tuesday, US benchmark crude oil picked up 31 cents to $65.60 per barrel. Brent crude, the international standard, also gained 31 cents, to $67.35.

The dollar rose to 144.93 Japanese yen from 144.61 yen. The euro slipped to $1.1399 from $1.1421.