HONG KONG - Asian markets cooled off on Tuesday after the previous day's surge as traders digested Donald Trump's visit to Asian ally Japan, ahead of his high-stakes talks with Chinese President Xi Jinping later this week.
The US president is due to meet Xi on Thursday in South Korea, and rosy comments by Trump have fuelled optimism that the world's two largest economies can strike a deal to ease their trade war.
Those hopes spurred stocks to record highs Monday on Wall Street, where investors are also preparing for earnings reports from tech giants including Microsoft and Meta this week.
In Tokyo on Tuesday, Trump met new Japanese Prime Minister Sanae Takaichi, declaring that the United States was "an ally at the strongest level".
The White House announced that the countries had signed an agreement on the supply of rare earths, a critical sector dominated by China that has deepened the antipathy between Washington and Beijing.
Takaichi also said Japan was facing an "unprecedented severe security environment", in a nod to the geopolitical tensions underlying Trump's Asia tour.
Japan's Nikkei 225 index finished the day down 0.6 percent, after surging above 50,000 points on Monday for the first time.
Shares in Hong Kong, Shanghai, Taipei and Sydney also slid, while Seoul rallied from a more than one percent drop to close down 0.8 percent.
Morning trading in Europe saw shares edge up in London, while Paris and Frankfurt were down.