Most Asian stocks rose on Tuesday as investors cheered a sharp deescalation in the U.S.-China trade war, although Chinese markets lagged amid some profit-taking and speculation over a delay in more local stimulus. 

Regional markets took a positive lead-in from Wall Street, which clocked stellar gains in overnight trade after Washington and Beijing slashed their respective trade tariffs against each other.

But investors were now holding out for an even bigger deescalation in the tariff exchange, given that both countries still maintained some trade tariffs against each other. U.S. stock index futures fell slightly in Asian trade, with S&P 500 Futures futures falling 0.3% after the S&P 500 rallied 3.3% on Monday. 

Markets were also on edge ahead of key U.S. inflation data due later on Tuesday. 

Asia stocks cheer US-China tariff deescalation 

Japan’s Nikkei 225 and TOPIX indexes were the best performers in Asia, rallying 1.7% and 1.2%, respectively. 

Singapore’s Straits Times index added 0.7%, while Australia’s ASX 200 rose 0.7% to its highest level since late-February, following data showing a mild improvement in consumer sentiment. 

South Korea’s KOSPI added 0.4%, while markets across Southeast Asia also advanced. 

U.S. and Chinese officials said on Monday that Washington will cut its trade tariffs on China to 30% from 145%, while Beijing will cut its tariffs on the U.S. to 10% from 125%. 

The move marked a major deescalation in a bitter trade war between the world’s largest economies, and spurred hopes that the U.S. will reach trade deals with several other major economies. 

Chinese shares lag amid profit-taking, stimulus doubts 

But despite the trade deescalation, Chinese markets vastly lagged their regional peers, in part due to some profit-taking after a strong run-up in the past week. The mainland Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose about 0.2% each, while Hong Kong’sHang Seng index slid 1.3% from a one-month high. 

Improving sentiment over a U.S.-China trade deescalation had driven strong gains in Chinese markets over the past week, limiting their upside after Monday’s move. 

But analysts also flagged the potential for some delays in Beijing’s plans for more stimulus, especially in the face of fewer trade headwinds. Citi analysts said that lower trade tensions gave Beijing less impetus to unlock more stimulus, especially on the fiscal front.

The need for more Chinese stimulus was underscored by a swathe of weak purchasing managers index and inflation readings for April. Weak inflation data released over the weekend also dampened enthusiasm towards Chinese markets. 

Indian stocks to cool after rallying on Pakistan ceasefire 

Gift Nifty 50 Futures for India’s Nifty 50 index pointed to a slightly weak open on Tuesday, with local stocks set for some profit-taking after rallying nearly 4% in the prior session.

Gains in Indian markets were driven by optimism over a U.S.-brokered ceasefire with Pakistan, which appeared to be holding after a shaky start during the weekend. 

The ceasefire marked a deescalation in some of the worst fighting between India and Pakistan in nearly three decades. 

Indian consumer inflation data is due later in the day, and is expected to show further cooling in April.