Last Friday, June 7, major Asian stock indices generally declined, buoyed by signs of easing US inflation, with market focus shifting to the upcoming Bank of Japan meeting, where the Bank is expected to further tighten its policies.

The Chinese market exhibited the weakest performance of the day, largely impacted by new tariffs imposed by the EU on major Chinese electric vehicle manufacturers. Concerns over potential retaliatory measures from China further dampened sentiment.

Wall Street provided a modest guide for the regional markets. Despite continued gains in the technology sector, the S&P 500 and Nasdaq Composite indices marked new highs for the fourth consecutive time, but broader industry sectors underperformed due to unexpected industrial inflation data showing a decline in May.

On Friday, Japan's Nikkei 225 and TOPIX indices traded narrowly, with market attention focused on the outcome of the Bank of Japan meeting scheduled for the same day.

Following a historic rate hike in March, the Bank of Japan is expected to maintain interest rates unchanged; however, it plans to further tighten policy by slowing the pace of bond purchases.

The market eagerly anticipates the extent to which the Bank of Japan will reduce bond purchases, given the recent sluggish performance of the Japanese economy, which limits the central bank's flexibility in tightening policy.

Nevertheless, further policy tightening could negatively impact the Japanese stock market, despite its gains this year from the Bank's ultra-loose stance.

China's CSI 300 and Shanghai Composite indices fell by 0.6% and 0.4% respectively, while Hong Kong's Hang Seng Index declined by 0.6%.

After the EU imposed heavy taxes ranging from 17% to 30% on imports of Chinese electric cars, the Chinese stock market continued to experience sell-offs. SAIC Motor Corporation Limited (stock code: 600104) was among the hardest hit, facing the highest tariffs among its peers.

The EU lags behind the US in taxing China's rapidly expanding electric car industry, but unlike the US, the EU is a crucial market for Chinese electric vehicle manufacturers.

Rising tariffs have sparked concerns in the market about whether the EU and US will further restrict imports from China, while Beijing may also announce retaliatory measures, risking relations between the world's two largest economies.

Broader Asian stock markets generally declined. Australia's ASX 200 index fell by 0.3%, while futures for Indonesia's IDX 50 index indicated a flat opening early in the week, after the index hit multiple highs earlier in the week.

South Korea's KOSPI index showed unusual performance, rising by 0.3%, driven by strong performance in technology companies.