SINGAPORE (AP) — Asian markets are mixed as the U.S. prepares to impose billions of dollars of tariffs on China, raising tensions between the world’s two largest economies. Trading was subdued on Thursday in the absence of leads from Wall Street with markets closed for the Independence Day holiday.

KEEPING SCORE: Japan’s Nikkei 225 index fell 0.8 percent to 21,544.54 and the Shanghai Composite index dropped 0.9 percent to 2,734.77. Hong Kong’s Hang Seng index tumbled 0.9 percent to 27,995.08 and the Kospi in South Korea lost 0.8 percent to 2,247.43. Australia’s S&P ASX/200 added 0.4 percent to 6,210.60. Shares fell in Taiwan and Southeast Asian indexes were mixed.

US-CHINA TARIFFS: On Friday, the U.S. is set to impose a 25 percent tariff on $34 billion worth of Chinese imports. China has said that it won’t make the first move. But it is expected to retaliate with a similar amount of tariffs on American goods, including soybeans, electric cars and whiskey. The Trump administration said it won’t target an additional $16 billion worth of Chinese goods until it gathers further public comments.

ANALYST’S TAKE: “We are now two steps removed from the worries of trade tensions as the tariffs deadline looms, locking equity markets in a lackluster trading tone,” said Jingyi Pan of IG.

ENERGY: Benchmark U.S. crude dropped 31 cents to $73.83 per barrel in electronic trading on the New York Mercantile Exchange. The contract settled at $74.14 a barrel on Tuesday, after ticking up to over $75 a barrel in early trading. Brent crude, used to price international oils, shed 57 cents to $77.67 per barrel.

CURRENCIES: The dollar fell to 110.35 yen from 110.51 yen on Wednesday. The euro rose to $1.1662 from $1.1641.

___ – Here are the top five things you need to know in financial markets on Thursday, July 5:

1. Europe Gets A Boost As Trump Offers “Zero Tariffs” On Autos

The U.S. ambassador to Germany has told German car bosses that President Donald Trump would suspend threats to impose tariffs on cars imported from the European Union if the bloc lifted duties on U.S. cars, a German newspaper reported.

Handelsblatt said Ambassador Richard Grenell told executives from Daimler (DE:DAIGn), Volkswagen (DE:VOWG_p) and BMW (DE:BMWG) during a meeting, which took place at the U.S. embassy in Berlin on Wednesday, that in exchange Trump wanted the EU to annul duties on U.S. cars imported to the bloc.

Trump threatened last month to impose a 20% import tariff on all EU-assembled vehicles, which could upend the industry’s current business model for selling cars in the U.S.

European stocks were higher, with Germany’s auto-heavy DAX, which has been the most sensitive to trade tensions, managed a 1.2% gain.

The Stoxx Europe 600 Automobiles and Parts index (SXAP), the sector benchmark, rose more than 3%, the biggest one-day gain in 18 months, while Germany’s biggest carmakers posted solid gains in trading in Frankfurt.

2. China Stocks Slide to Two-Year Low On Eve Of U.S. Tariff Deadline

Chinese shares led losses in Asia, with financial markets in the region jittery before a U.S. deadline to impose tariffs on Chinese imports just a day away.

The Shanghai Composite closed down 0.9%, marking its third-straight losing session, while the tech-heavy China Shenzhen ChiNext Composite fell 2.2%, after logging a 2.6% decline on Wednesday.

Markets are on edge ahead of Friday, when U.S. tariffs on $34 billion worth of Chinese products – and retaliatory Chinese tariffs on U.S. goods of the same value – are expected to kick in.

Due to the time difference, duties imposed by Beijing would likely take effect before Washington’s tariffs on Friday. China’s finance ministry, however, has said that it will “absolutely not” fire the first shot in its trade spat with the U.S.

3. Dow Futures Rise 150 Points

Wall Street futures point to solid opening bell gains, as hopes over a softening in U.S. trade rhetoric lifted sentiment among traders returning from the Fourth of July holiday.

At 5:45AM ET, the blue-chip Dow futures were up 150 points, or around 0.6%, the S&P 500 futures rose 17 points, or almost 0.6%, while the tech-heavy Nasdaq 100 futures indicated a gain of 44 points, or roughly 0.6%.

Markets stateside were closed on Wednesday because of the Independence Day holiday.

There are no major earnings scheduled for today.

4. Fed Minutes, U.S. Data On Tap

Investors are awaiting the publication of minutes from the Federal Reserve’s June meeting at 2:00PM ET, for further clues into the outlook for monetary policy.

The U.S. central bank raised interest rates as widely expected following its meeting on June 13 – its second rate increase of the year – and took a slightly more hawkish policy tone in signaling two additional rate hikes by year-end.

Besides the Fed, market players will also focus on a fresh batch of U.S. economic data to gauge the health of the world’s largest economy.

The highlight of Thursday’s economic calendar will be the ADP jobs report for June at 8:15AM ET, which is often seen as a warmup act for the big Friday government nonfarm payrolls report.

An ISM survey on service sector activity is due at 10AM ET.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was a shade lower at around the 94.10-level.

5. Trump Turns Up Pressure On OPEC; EIA Data Ahead

Oil prices eased slightly after U.S. President Donald Trump sent a tweet urging OPEC to reduce prices for crude.

Trump late on Wednesday said the Organization of Petroleum Exporting Countries (OPEC) producer cartel was driving up fuel prices.


Meanwhile, supply data from the Energy Information Administration will be released at 11:00AM ET, a day later than usual because of Wednesday’s Independence Day holiday, amid forecasts for an oil-stock drop of 5.2 million barrels.

The data will also offer fresh indications on how fast domestic output levels continue to rise. U.S. crude production – driven by shale extraction – is currently at an all-time high of 10.9 million barrels per day (bpd).

After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories fell by 4.5 million barrels last week.

U.S. West Texas Intermediate crude futures were 22 cents higher at $74.36 per barrel, while Brent crude oil futures were at $78.07 per barrel, down 18 cents from their last close.