China's stock markets showed little movement on Tuesday, with Hong Kong’s shares experiencing a notable decline as initial excitement over a new U.S.-China trade agreement began to fizzle out, giving way to growing concerns about the prolonged negotiations ahead.

Following weekend talks in Geneva that exceeded market expectations, a deal was reached to delay and reduce tariffs, igniting a rally in global markets and boosting the dollar. Despite this lull in hostilities, lingering fears that future negotiations may not yield quick resolutions are weighing heavily on investor sentiment.

The CSI 300 Index, which is a benchmark for China's blue-chip stocks, saw a minimal increase of less than 0.1%, while the Shanghai Composite Index climbed 0.2% during early trading. However, in Hong Kong, the Hang Seng China Enterprises Index dropped 1.1%, and the benchmark Hang Seng Index retreated 1% from a six-week peak.

Analysts believe this might be an early sign of continued friction between the world's two largest economies. Ting Lu, Nomura's chief China economist, commented, "Markets are perhaps starting to reflect on the medium to long-term risks after an initial rebound."

U.S. Treasury Secretary Scott Bessent confirmed a 90-day ceasefire on tariffs after negotiations in Geneva, noting that tariffs on Chinese goods would decrease significantly. U.S. tariffs will drop from 145% to 30%, while Chinese tariffs on U.S. imports will reduce from 125% to 10%.

The consumer electronics sector benefitted from these tariff concessions, gaining 0.3%, while the energy sector surged by 0.8%, and banking stocks were up by 0.7%, all contributing to the modest gains in mainland markets. However, the rare-earths sector, which was not addressed during the discussions, saw a dip of 0.4%.

Despite a rough start last month triggered by President Trump's aggressive tariff policies, the Chinese stock markets have bounced back. The CSI 300 Index is currently trading 0.3% higher than its levels from early April, prior to Trump's announcement of reciprocal tariffs.

Kamil Dimmich, a portfolio manager at North of South Capital EM fund, remarked, "We’ve been gradually increasing our investments in China, believing that tariffs will significantly decrease over time. While the markets may have quickly reacted to expected normalization, we’re in no rush to add more and are content with our current positions as volatility is likely to continue in the foreseeable future."