Asian shares trade mixed after Wall Street sets new records

TOKYO (AP) — Asian shares traded mixed on Tuesday after Wall Street set new records as investor anticipation grew that the U.S. Federal Reserve will announce the first cut of the year on its main interest rate.

Japan’s benchmark Nikkei 225 came off a holiday to momentarily reach about 45,000 points in the morning session, then traded 0.3% higher than the previous close at 44,904.13. Australia’s S&P/ASX 200 edged up 0.2% to 8,871.30. South Korea’s Kospi rose 1.1% to 3,446.13.

Hong Kong’s Hang Seng declined 0.2% to 26,384.95, and the Shanghai Composite fell 0.4% to 3,846.61. U.S. Treasury Secretary Scott Bessent said after weekend trade talks in Spain that a framework deal had been reached between China and the U.S. over the ownership of popular social video platform TikTok,

Bessent said after the latest round of trade talks between the world’s two largest economies concluded in Madrid that U.S. President Donald Trump and Chinese Premier Xi Jinping would speak Friday to possibly finalize the deal. He did not disclose the terms of the deal.

On Wall Street, the S&P 500 climbed 0.5% and topped its prior all-time high, which was set last week. The Dow Jones Industrial Average rose 49 points, or 0.1%, and the Nasdaq composite added 0.9% to its own record.

Tesla helped lead the way and rose 3.6% after Elon Musk bought stock worth roughly $1 billion through a trust. The electric vehicle company’s stock price came into the day with a slight loss for the year so far, and the purchase could be a signal of Musk’s faith in it.

Alphabet was the single strongest force lifting the S&P 500 after gaining 4.5%, which brought the total value for Google’s parent company above $3 trillion. Nvidia, Microsoft and Apple are the only other companies on Wall Street worth that much.

The market’s main event for the week will arrive on Wednesday. That’s when the Federal Reserve will announce its latest decision on interest rates. A rate cut could give a kickstart to the job market, which has been slowing.

Stocks have already run to records on the assumption that a cut is coming on Wednesday, though. Expectations are also high that the Fed will keep lowering rates through the end of this year and into 2026. That creates the possibility for disappointment in the market, which would mean drops for stock prices if the Fed doesn’t end up slashing rates as aggressively as traders expect.

What’s keeping the Fed on guard is a possible jump in inflation because of Trump’s tariffs. That’s because lower interest rates can give inflation more fuel and send it even higher. And inflation has already proven difficult to get under the Fed’s 2% target.