Asia markets set to fall as U.S. trade talks with China hang in the balance

Asia-Pacific markets are expected to fall as U.S. Commerce Secretary Howard Lutnick affirmed that President Donald Trump's upcoming Friday deadline to impose major tariffs on a slew of trading partners will not be delayed further.

However, Lutnick noted that trade negotiations with China are progressing on a separate timeline, he said on CNBC's “Squawk Box.”

Opening calls

Happy mid-week from Singapore. Asia markets are poised for a lower open.

Futures for Hong Kong's Hang Seng Index stood at 25,344, pointing to a weaker open compared with the HSI's last close of 25,524.45

Similarly, Australia's S&P/ASX 200 was set to start the day lower with futures tied to the benchmark at 8,662, compared with its last close of 8,704.6.

Japan's benchmark Nikkei 225 was set to open lower, with the futures contract in Osaka last traded at 40,650 against the index's last close of 40,674.55.

Stocks close lower on Tuesday

Stocks closed lower on Tuesday, as investors turn their attention to the Federal Reserve's interest rate decision.

The S&P 500 slipped 0.30% to close at 6,370.86, while the Nasdaq Composite lost 0.38% to 21,098.29. The Dow Jones Industrial Average slipped 204.57 points, or 0.46%, to finish the session at 44,632.99.

Tariffs will still deal a blow to economic growth despite recent progress, says UBS

Investors should remain vigilant and not look past the potential risks of tariffs, according to UBS.

“The impact of tariffs can't be overlooked even though recent deals have provided greater clarity. While the 15% tariff rate on most EU and Japanese goods was lower than earlier threats from the U.S., the higher levies will still create headwinds for growth,” said Ulrike Hoffmann-Burchardi, chief investment officer for the Americas and global head of equities at UBS Global Wealth Management.

“While our base case is that the resilience of the US consumer should help the U.S. economy avoid recession, a larger-than-expected impact on inflation or more severe hit to corporate margins could quickly change the current optimistic market narrative,” she added.