Asian markets edged cautiously higher on Tuesday, retracing some of the sharp declines seen in the overnight session as stocks tracked gains seen on Wall Street although worries over U.S. trade policy lingered in the background.

The Nikkei 225 advanced 0.22 percent in early trade after steep losses seen in the previous session. Insurers and retailers were among the best-performing sectors in the morning, with heavyweight Fast Retailing climbing 1.27 percent.

In South Korea, the Kospi edged up by 0.29 percent, with technology stocks and manufacturers gaining. Samsung Electronics and steelmaker Posco were up 0.99 percent and 1.11 percent, respectively.

The S&P/ASX 200, meanwhile, drifted higher by 0.19 percent as the consumer staples subindex surged 1.01 percent, leading gains in the morning.

Gains in the region followed the move higher in U.S. stocks, which had closed in positive territory after dipping early in the overnight session on trade concerns. The Dow Jones Industrial Average rose 0.15 percent, or 35.77 points, to close at 24,307.18, the S&P 500 edged up by 0.31 percent to 2,726.71 and the Nasdaq composite outperformed, advancing 0.76 percent to finish at 7,567.69.

Despite the slightly more buoyant mood on Tuesday, investors are likely to continue watching developments on the trade front. A looming July 6 deadline is set to see the U.S. impose a 25 percent tariff on $34 billion worth of Chinese goods from more than 800 product categories. China has also announced that it will retaliate with duties on the same value of U.S. products.

The U.S. is also engaged in disputes on trade issues with other key trading partners, including Canada and the European Union. The U.S. could face tariffs from the European Union on as much as $300 billion in U.S. goods if the Trump administration proceeds with imposing duties on European cars, the Financial Times reported.

Markets in Europe and Asia closed lower in the previous session amid the concerns over trade, with the pan-European Stoxx 600 declining 0.84 percent. Asian stock indexes saw steeper losses as China markets resumed their slide after getting some reprieve at the end of last week, with the Shanghai composite dropping 2.52 percent on Monday.

Amid the market moves ahead of that July 6 deadline for tariffs, U.S. Commerce Secretary Wilbur Ross told CNBC there was no “bright line level of the stock market” that would change U.S. President Donald Trump’s mind on trade policy.

Investor jitters over trade concerns also supported the greenback. The dollar index, which tracks the dollar against a basket of currencies, traded at 94.843 at 8:03 a.m. HK/SIN after rising above the 95 handle in the overnight session. Against the yen, the dollar traded at 110.91.

Ahead, the Reserve Bank of Australia is set to announce its interest rate decision at 12:30 p.m. HK/SIN.