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Global markets rose modestly in early trading after a new report that China and the United States plan to hold trade talks by mid-June.

However, equity markets for the APAC region gave up some of their gains to trade in the red. Taiwan bucked the trend, ending flat, after retaking Tuesday’s level. For the Asia-Pacific, Hong Kong gained 0.48% and Indonesia ended up 0.35%.

Earlier in the session, China’s Caixin manufacturing index registered its sharpest fall in two years, with private sector factories shedding jobs amid a deepening trade conflict between the world’s two largest economies. The 10-year benchmark government bond yield nudged above 6% for the first time in years. Meanwhile, the dollar traded lower against a basket of major currencies on expectations of a protracted U.S.-China trade spat.

Despite the drop in manufacturing activity, observers expect the index to bounce back, supported by expectations of further government stimulus.

“Even though the Caixin manufacturing activity weakened sharply this month, analysts expect the index to rebound soon,” said Hong Jiayi, a chief analyst at Central China Securities. “Its recent retreat was caused by a particularly severe cold winter across the country. Though Caixin’s manufacturing index is seeing some slippage due to the economic downturn, its current stability is positive”

In U.S. stock news, Tesla lost more than 1% in early trading after the company’s second-quarter sales fell short of analysts’ expectations. The electric-car maker sold 41,529 vehicles in the three months ending in May, missing Wall Street’s forecast of 50,000 units, according to data from IHS Markit. It was the auto maker’s third straight quarterly shortfall.

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