Asian markets mostly rose on Monday, with investors keeping a wary eye on Sino-US trade talks planned for the weekend, which come after Washington imposed sanctions on several Hong Kong officials, further straining tensions between the superpowers.

Adding to uncertainty was US lawmakers’ inability to find common ground on a much-needed new stimulus for the world’s top economy, with executive orders signed by President Donald Trump considered sticking plasters for a crippling crisis.

Washington on Friday hit a group of Chinese and Hong Kong officials – including the city’s leader Carrie Lam – with sanctions in the latest salvo in a row linked to Beijing’s decision to impose a security law on the city.

The move came after the White House set the clock ticking on forcing Chinese internet giants TikTok and WeChat to end all operations in the US, as part of a diplomatic-commercial offensive analysts fear will likely worsen leading into November’s presidential election.

China slammed the sanctions as “barbarous and rude”.

On Monday, Hong Kong media mogul Jimmy Lai, one of the city’s most vocal Beijing critics, was arrested under the security law, deepening a crackdown on democracy supporters.

US regulators also last week recommended overseas firms listed in the US should be subject to local public audit reviews from 2022, which could cause Chinese firms to delist.

The White House also angered China on Monday when a cabinet member – Health Secretary Alex Azar – met Taiwan’s leader in the highest level visit from the US since it switched diplomatic recognition from the island to China in 1979.

The developments have put the spotlight on Saturday’s meeting of trade officials to review their “phase one” trade deal signed in January.

There is a concern that the pact could be torn up as China has failed to meet certain criteria owing to the impact of the virus, a move most experts say would be devastating to a global economy that is already teetering.

Still, National Australia Bank’s Tapas Strickland said “the running assumption in markets has been President Trump needed the phase one deal to succeed [as much as China] this side of the November elections to secure the midwest” farming belt.

But he added: “At the same time President Trump is running a hard China line into the elections.”

And Stephen Innes at AxiCorp warned that with polling figures tumbling and US virus infections surging, he could use the China row to show him as a strong leader.

“If he thinks it will boost his polling numbers, look for him to lash out at China more aggressively, even heaping on additional tariffs. The ramifications for the nascent global recovery would be grim.”

Hong Kong edged lower with Tencent shedding nearly five per cent after a similar drop on Friday in reaction to the US WeChat move.

But Next Digital soared 344 per cent after the arrest of Lai. Analysts said the surge was fuelled by pro-democracy activists urging investors on social media to pile into the market to support the firm.

The rest of Asia was in were positive territory with Sydney 1.8 per cent higher, while Seoul and Manila were also more than one per cent up.

Shanghai jumped 0.8 per cent, Mumbai added 0.7 per cent and Taipei put on 0.5 per cent. London, Paris and Frankfurt all advanced in early trade.

The stimulus stand-off in Washington continued to disappoint, with Democrats and Republicans still unable to bridge their differences to push through a new plan.

With matters at a standstill, Trump signed measures on Saturday giving Americans up to $400 a week extra in their unemployment benefits, while others offer some protection from evictions and relief for student loans. Another ordered a freeze in payroll taxes.

Observers said there was some hope the move would spur politicians to work harder to reach a deal, though others warned it could in fact give them less urgency to work together.

“Both parties are going to have to tread very carefully but they are going to have to move on and try to come to some kind of agreement,” Kim Forrest, at Bokeh Capital Partners LLC, told Bloomberg TV.

There was some good news for markets on Friday, with data showing the US economy created 1.8 million jobs last month – far fewer than in May and June, but more than economists had been expecting – while unemployment dipped to 10.2 per cent from 11.1 per cent.