Asian Stocks Up Early As Tariffs Remain In Focus: Markets Wrap

Asian stocks rose in early trade, with caution remaining over a global rebound after President Donald Trump’s decision to impose tariffs and sanctions on Colombia for impeding his immigration goals. The dollar edged higher.

Japanese benchmarks advanced, with Hong Kong futures pointing to mild gains at open. US equity futures slid, paring last week’s gain that was the best start to a presidential term since 1985. Australia’s stock and bond market is closed for a holiday. 

Global markets rebounded last week as fears a global trade war would erupt in the first days of Trump’s presidency were assuaged after the President avoided placing immediate import levies on goods from Mexico, Canada and China. Threats resurfaced, however, after Trump ordered punitive trade sanctions on Colombia Sunday for rejecting US deportation flights over human rights issues. 

“It is too early to conclude that we are off the peak-tariff threat,” said Wee Khoon Chong, a strategist at BNY in Hong Kong. “Asia risks remain vulnerable from tariff uncertainties. That said, any less aggressive or soft tariff tone would be welcome in the short-term.”

The dollar edged higher in early Asian trading following the trade sanctions on Colombia while the Mexican peso declined. The move pares the greenback’s biggest slump in more than a year last week as proxies for Chinese tariffs including the Australian dollar rallied, while Eastern European and Latin American currencies paced gains in emerging markets. 

A further test of sentiment looms with Chinese activity data due Monday, that may show soft momentum in the nation’s manufacturing sector at the end of 2024 carrying over into this year, according to Bloomberg Intelligence. Moves in Asia however, may be exacerbated by thin trading with major centers beginning to shut mid-week for the Lunar New Year holiday. 

Elsewhere, the start of the US tech earnings season is key to global equities. Investors are eager to see whether demand for artificial intelligence will live up to sky-high expectations. The industry was buoyed earlier in the week, with SoftBank Group Corp., OpenAI, and Oracle Corp. forming a $100 billion joint venture to fund AI infrastructure, an effort unveiled with Trump. 

The US central bank is widely expected to hold interest rates steady at the end of its two-day meeting on Wednesday, marking the first pause in the rate-cutting cycle it kicked off in September. 

The US economy remains strong with robust employment growth and the decline in inflation has slowed, “there is therefore no need to cut interest rates urgently,” ANZ Group Holdings Ltd. economists including Sharon Zollner wrote in a note to clients. “In addition, yet-to-be-confirmed US trade and tariff policy, federal government efficiency drives, re-focused energy policy and deregulation all hold implications for growth and inflation. This justifies FOMC caution.” 

In commodities, oil posted its first weekly decline of the year after Trump threatened penalties on Moscow if Russia didn’t make a deal to end the war in Ukraine, and demanded OPEC+ lower the cost of crude. Coffee prices will be watched when trading opens later Monday after tariffs on Colombia, the world’s third-largest producer.

Bitcoin edged lower after touching a fresh record last week after Trump last week signed an order to create a working group of key agencies to advise on crypto policy and create a regulatory framework and legislative proposals. Gold advanced for a fourth straight week.

Key events this week: 

• China industrial profits, manufacturing and non-manufacturing PMI, Monday

• ECB President Christine Lagarde and others speak, Monday

• US consumer confidence, durable goods, Tuesday

• Chile rate decision, Tuesday

• Australia CPI, Wednesday

• BOE Governor Andrew Bailey speaks, Wednesday

• US rate decision, Wednesday

• Tesla, Microsoft, Meta, ASML earnings, Wednesday

• Canada rate decision, Wednesday

• Brazil rate decision, Wednesday

• BOJ Deputy Governor Ryozo Himino speaks, Thursday

• Eurozone consumer confidence, unemployment, GDP, Thursday

• ECB rate decision, Thursday

• South Africa rate decision, Thursday

• US GDP, jobless claims, Thursday

• Apple, Deutsche Bank, Shell earnings, Thursday

• Japan unemployment, Tokyo CPI, Friday

• US personal income & spending, PCE inflation, Friday

• Colombia unemployment, rate decision, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.5% as of 9:04 a.m. Tokyo time

• Hang Seng futures rose 0.2%

• S&P/ASX 200 futures fell 0.1%

• Japan’s Topix rose 1%

• Euro Stoxx 50 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.3% to $1.0466

• The Japanese yen rose 0.1% to 155.77 per dollar

• The offshore yuan fell 0.2% to 7.2623 per dollar

Cryptocurrencies

• Bitcoin fell 1.8% to $102,733.17

• Ether fell 1.9% to $3,233.91

Bonds

• The yield on 10-year Treasuries declined two basis points to 4.60%

• Australia’s 10-year yield was little changed at 4.48%

Commodities

• West Texas Intermediate crude fell 0.6% to $74.22 a barrel

• Spot gold fell 0.1% to $2,766.91 an ounce

This story was produced with the assistance of Bloomberg Automation.