Asian shares advance on relief that Trump is delaying higher China tariffs

TOKYO -- Asian shares mostly advanced Tuesday after President Donald Trump delayed raising tariffs on China for another 90 days.

Japan's benchmark Nikkei 225 jumped 2.6% to 42,942.14, topping its past all-time record. Toyota Motor Corp.'s shares surged 3.3% and other heavyweight shares also saw big gains.

Hong Kong's Hang Seng slipped nearly 0.2% to 24,865.07, while the Shanghai Composite edged up 0.3% to 3,658.62.

Trump signed an executive order Monday putting on hold a possible showdown between the world’s two major economies to allow time for more talks on a broad trade agreement. Without an extension, taxes on Chinese imports might have jumped from an already high 30%.

Beijing could have responded by raising retaliatory levies on U.S. exports to China but it issued a similar statement about the extension of the tariff pause.

The reprieve makes room for a possible deal with Trump, but it also prolongs the uncertainty that has bedeviled companies since the president began escalating his trade war.

“The extension isn’t about goodwill; it’s about keeping oxygen in the room for deals that matter,” Stephen Innes of SPI Asset Management said in a commentary.

Elsewhere in Asia, Australia’s S&P/ASX 200 was little changed, rising less than 0.1% to 8,852.80. South Korea’s Kospi added 0.6% to 3,227.10.

On Monday, U.S. stocks edged back from their record highs ahead of an update on U.S. inflation. The S&P 500 dipped 0.3% to 6,373.45 after flirting with its all-time high, which was set two weeks ago.

The Dow Jones Industrial Average dropped 0.5% to 43,975.09, and the Nasdaq composite slipped 0.3% to 21,385.40.

The highlight of this week for Wall Street will likely arrive on Tuesday, when the government will report how bad inflation was across the country in July. Economists expect it to show U.S. consumers had to pay prices for groceries, gasoline and other costs of living that were 2.8% higher than a year earlier, a slight acceleration from June’s 2.7% inflation.

Inflation has remained above 2%, even if it has improved substantially from its peak above 9% three years ago. And the worry is that President Donald Trump’s tariffs could push prices still higher.

That in turn is raising fears about a potential, worst-case scenario called “stagflation” where the economy stagnates but inflation remains high. The Federal Reserve has no good tool to fix both at once, and it would need to concentrate on either the job market or inflation first. But helping one of those areas by moving interest rates would likely hurt the other.

A top Fed official, Michelle Bowman, said on Saturday that she believes the job market is the bigger concern. She is still backing three cuts to interest rates by the Fed this year following this month’s stunning, weaker-than-expected report on the U.S. job market. Trump has also been angrily calling for cuts to interest rates to support the economy.

Other Fed officials, led by Chair Jerome Powell, have been more hesitant. Powell has said he wants to wait for more data about how Trump’s tariffs are affecting inflation before the Fed makes its next move, and Tuesday’s update on the consumer price index may offer a big clue about that.

The price of gold eased after Trump said he would not place tariffs on the metal. That followed a brouhaha Friday in the gold market after the U.S. Customs and Border Patrol seemed to rule that some kinds of gold bars coming from Switzerland would face a tariff. That caused a disconnect between the prices of gold trading in New York versus in London, but the market has since calmed.

Gold for December delivery settled at $3,404.70 per ounce in New York, down 2.5%. Early Tuesday, it was down 0.1% at $3,399.70.

In other dealings early Tuesday, benchmark U.S. crude rose 17 cents to $64.13 a barrel. Brent crude, the international standard, added 21 cents to $66.84 a barrel.

In currency trading, the U.S. dollar edged up to 148.44 Japanese yen from 148.15 yen. The euro cost $1.1621, up from $1.1618.

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AP Business Writer Stan Choe contributed.