Global stocks followed Wall Street higher as investors brushed off rising tension between the US and China and the prospect of troops being deployed to quell violent unrest on America’s streets.

In early Asia-Pacific trading on Tuesday, Japan’s benchmark Topix added 1 per cent, while indices in Australia and Hong Kong also inched higher. China’s CSI 300 index of Shanghai- and Shenzhen-listed shares was little changed after the central bank said it had earmarked Rmb400bn ($56bn) to temporarily purchase small business loans from banks, as part of measures to support lenders hit by the coronavirus outbreak.

Overnight on Wall Street the S&P 500 closed 0.4 per cent higher, extending a rally that has positioned the stock benchmark less than 10 per cent from its all-time high. US stocks have been boosted in recent weeks by hopes of a V-shaped recovery in the world’s biggest economy following the pandemic.

But futures markets tipped the S&P 500 to slip 0.4 per cent when trading begins later on Tuesday. On Monday after the market’s close, President Donald Trump warned that he would send in the military to clamp down on cities that have been hit by violent unrest following the death of an unarmed black man at the hands of police.

Analysts said that threatened to undermine a positive US markets narrative characterised by investor optimism over the gradual easing of lockdowns across the country. Some also fear there is a risk that Covid-19 could spread among large groups of protesters, leading to a second wave of infections.

“Not only does the violence and damage to property hinder the reopening of the economy, but it surely also creates a hotbed for renewed infection as well as worry about pepper spray and rubber bullets,” said Robert Carnell, head of Asia-Pacific research at ING. “The US new [coronavirus] case numbers have been fairly steady recently . . . it wouldn’t take a lot for them to start rising again.”

Tumult in US cities is not the only factor that investors believe could weigh on the recent equity rally, with tension between Washington and Beijing having resurfaced in recent weeks.

Late last week, Mr Trump revoked Hong Kong’s special trade privileges in retaliation for Beijing’s decision to impose a controversial security law on the former UK colony. On Monday, Bloomberg reported that China had halted imports of some US agricultural products in a develop that could bode ill for trade relations.

The yield on 10-year US Treasuries, viewed by investors as a haven asset in times of uncertainty, slipped 0.01 percentage point to 0.653 per cent.

Oil prices were slightly higher on Tuesday, with international marker Brent adding 0.4 per cent to $38.47. West Texas Intermediate, the US benchmark, gained 0.1 per cent to $35.46.

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