Asian stock markets were mixed on Wednesday, with Hong Kong and South Korea climbing, mirroring overnight tech gains on Wall Street, while Japan slipped amid a stronger yen.

The rally induced by a temporary U.S.-China tariff deal appeared to be losing steam, as investors focused on further trade negotiations.

U.S. stock index futures were largely muted in Asian trading on Wednesday after the S&P 500 and tech-heavy NASDAQ Composite posted gains in regular trading on Monday.

Data on Tuesday showed that the U.S. consumer price index inflation came in softer than estimates, alleviating some fears about the impact of U.S. trade tariffs.

Tech gains were driven by NVIDIA (NASDAQ:NVDA), after the company announced a major chip deal for the sale of 18,000 AI chips to a Saudi Arabian company, Humain.

HK, S. Korea jump 1.5%; rest muted as trade optimism rally loses steam

Most Asian stock markets saw sharp gains on Tuesday as investors cheered a sharp de-escalation in the U.S.-China trade war.

The U.S. and China said in a joint statement on Monday that they have agreed to temporarily lower soaring tariffs placed on each other.

The U.S. will reduce its tariff on Beijing from 145% to 30%, while China will lower its retaliatory tariff from 125% to 10%, both for 90 days. 

The U.S. will also bring down tariffs on lower-value products imported from China, it said on Tuesday.

Chinese markets were subdued as easing tensions reduced bets of an upsized government stimulus package.

China’s Shanghai Composite index and the Shanghai Shenzhen CSI 300, were both largely flat.

Meanwhile, Hong Kong’s Hang Seng index rose more than 1% with major Chinese internet stocks like Alibaba (HK:9988), and Tencent (HK:0700) gaining, mirroring Wall Street gains.

South Korea’s KOSPI also jumped 1.5% on Wednesday, with chip makers Samsung Electronics (KS:005930) and SK Hynix Inc (KS:000660) leading gains. 

Elsewhere, markets were broadly muted on Wednesday.

Australia’s S&P/ASX 200 edged 0.1% lower, while Singapore’s Straits Times Index ticked down 0.3%.

Futures for India’s Nifty 50 were unchanged amid heightened geopolitical tensions with neighboring Pakistan.

Japan shares drop as yen strengthens amid BOJ rate hike bets

Japanese stocks declined on Wednesday as the yen strengthened, driven by growing expectations of a Bank of Japan (BOJ) interest rate hike. 

The Nikkei 225 index fell 0.8%, while the broader Topix index slipped more than 1%.

A stronger yen typically weighs on Japanese exporters, as it reduces the value of overseas earnings when converted back to yen.

Data released Wednesday showed Japan’s wholesale inflation rose to 4.0% in April, highlighting persistent price pressures that are expected to keep the central bank on track for additional interest rate hikes.

The Bank of Japan is set to meet on May 19-20 to decide on its interest rates.