Asian markets showed an uneven reaction Tuesday after Wall Street posted gains following comments that investors interpreted as a less confrontational tone from the U.S. toward China. While the mood on global trading floors improved, the lift was uneven: some export- and tech-heavy bourses pushed higher, while others gave back earlier gains as traders weighed macro and policy risks.

In Tokyo, the Nikkei 225 advanced modestly, reflecting demand for Japanese exporters that stand to benefit from a reduction in bilateral tensions. Elsewhere, benchmark indexes in Hong Kong and mainland China were mixed, with investors still cautious about the nation’s longer-term growth prospects. MSCI’s broad Asia-Pacific ex-Japan gauge traded around flat after moving in both directions early in the session. U.S. equity futures were little changed, suggesting Wall Street’s rally may have been digested rather than extended.

“The market reaction shows the relief trade is real but limited,” said a Hong Kong-based equity strategist. “Reduced talk of new sanctions or trade escalation helps sentiment, but it doesn’t erase concerns about Chinese demand, corporate earnings or the path of U.S. interest rates.”

Traders cited comments over the past 48 hours that investors read as a signal Washington will seek more predictable ties with Beijing. That interpretation underpinned the previous session’s rebound on Wall Street, where cyclical and industrial stocks outperformed on expectations that smoother geopolitics could support global trade flows. Yet analysts caution that reassurances are not the same as policy change, and headlines can swing quickly given the backdrop of an election year and ongoing competition over technology and supply chains.

Fixed-income markets reacted conservatively; U.S. Treasury yields dipped slightly as traders reduced a short-term premium for geopolitical risk, but yields remain elevated by historical standards amid an expectation that central banks will keep monetary policy restrictive until inflation is firmly back to target. Currency moves were muted, with the dollar broadly steady against Asian currencies, though the yen showed intermittent weakness as exporters benefited from a firmer risk tone.

For regional economies, the stakes are high. Export-driven markets such as South Korea and Taiwan stand to gain if trade flows normalize and semiconductor demand improves, but both remain vulnerable to cyclical downturns in global electronics demand. Meanwhile, China’s uneven recovery—marked by weak consumption and lingering property-sector strains—limits gains for the broader region even when geopolitical risk eases.

Policy shifts will determine whether Tuesday’s calm persists. Investors are watching Washington’s diplomatic signals, Beijing’s stimulus trajectory, and central banks’ rate guidance. “A temporary thaw in rhetoric can buoy markets, but sustainable gains require clearer growth signals from China and a firmer view on rates,” the strategist said. Until then, market moves are likely to be driven by headline risk and data releases rather than a decisive re-pricing of regional fundamentals.