Reports that the US is considering removing tariffs on more than $100 billion of Chinese imports in order to get a mini pact done sent Asian markets surging Tuesday.

Hong Kong, China — Asian investors moved cautiously on Wednesday as optimism over the China-US trade talks was offset by profit-taking after a recent rally.

Another record close on Wall Street provided another positive lead for regional traders, who are keeping tabs on progress in the tariff negotiations, with expectations a deal could be signed this month.

The US gains came after data showed a better-than-forecast increase in activity in the key US services sector last month, which added to signs the world’s top economy was stabilizing.

Reports that the US is considering removing tariffs on more than $100 billion of Chinese imports in order to get a mini pact done sent Asian markets surging Tuesday.

And signs of progress helped support the Chinese yuan, which was hovering slightly above seven to the dollar, having broken below the level on Tuesday for the first time since May.

However, Stephen Innes at AxiTrader said investors could be reaching their limit for more gains until there is more movement on the trade talks.

“Sentiment is extremely optimistic and it could be that we are nearing the peak of the sentiment wave, and a phase one Sino-US deal is fully priced,” he said.

“So the big question for equity investors from this point forward: are they confident enough to back up the truck into stock markets.”

Hong Kong ended marginally higher while Tokyo finished 0.2 percent higher, with Singapore putting on 0.4 percent. Taipei and Seoul each gained 0.1 percent, while Mumbai and Bangkok were also higher.

But Shanghai closed down 0.4 percent, Sydney shed 0.6 percent, Wellington dropped 0.8 percent and Manila fell two percent.

In early trade, London dipped 0.2 percent while Paris and Frankfurt were flat.

Rodrigo Catril at National Australia Bank sounded a note of caution about the trade talks.

“The latest news has added further fuel to the notion that a… phase one trade deal looks imminent,” he said in a note.

“The final decision, however, lies with President Trump and what is also unclear is whether China’s position on the removal of tariffs is all or nothing.

“It is clear now that the US will need to remove some tariffs in order to strike the deal, but if China doesn’t give more concessions in exchange, President Trump runs the risk of being criticized as ‘going soft’ on China ahead of the election.”

Oil prices, which reached six-week highs Tuesday on trade and economic hopes, slipped back in Asian business as investors fret over demand after data pointing to a jump in US stockpiles fuelled further demand worries.

Vandana Hari, founder of Vanda Insights, raised a flag over the possible impact on crude if the trade deal does not materialize.

“Some of the optimism over the trade deal that is being baked into oil prices might be a bit premature,” she told Bloomberg TV.