Asian Stocks Rise As Trump Open To Tariff Talks: Markets Wrap
The MSCI regional stock benchmark advanced 0.1% led by gains in South Korean and Japanese stocks. Contracts for the S&P 500 were little changed after falling Monday on tariff angst.
Asian shares edged higher as President Donald Trump left the door open for additional negotiations after imposing new tariff rates on partners including Japan and South Korea.
The MSCI regional stock benchmark advanced 0.1% led by gains in South Korean and Japanese stocks. Contracts for the S&P 500 were little changed after falling Monday on tariff angst. The won and the yen gained slightly while the dollar dipped 0.2% after jumping the most in three weeks Monday. Treasuries inched lower with yields on the 10-year rising about 1 basis point to 4.39%.
After announcing higher levies on several countries, Trump said he was still open to additional negotiations and pushed off increased duties until at least Aug. 1. The president also teased the possibility of additional negotiations and delays later Monday at the White House, saying the notifications were “not 100% firm.”
Despite Monday’s fall, stocks are hovering around record high levels. Markets recovered from their April plunge - when sweeping levies were announced - fueled by expectations that the tariff deadline will be extended, based on Trump’s pattern of threatening first and backing down later, a strategy analysts and strategists call “TACO” for “Trump Always Chickens Out.”
“Investors are looking past the latest tariff announcements, seeing them as a tactic to accelerate negotiations, rather than the final word of where duties will ultimately land,” said Frederic Neumann, HSBC’s chief Asia economist.
On Monday, Trump released the first in a series of tariff warning letters, just two days before agreements are due on countries facing his April 2 so-called reciprocal levies. The new rates include 25% duties on goods from Japan, South Korea, and Malaysia; 32% on Indonesia; 35% on Bangladesh; 36% on Thailand and Cambodia; and 40% on Laos and Myanmar.
“Maybe adjust a little bit, depending,” Trump said, indicating he would look favorably on countries continuing to offer additional concessions. “We’re not going to be unfair.”
Despite the market turmoil from Trump’s tariffs, stocks globally have rebounded from their April lows, reflecting optimism that Japan and other countries will strike deals with the US to avoid derailing growth.
So far, the US economy has held up under the threat of a spiraling global trade war. Hiring is healthy and inflation has remained tame. The Federal Reserve is wary about tariffs and wants to see how they feed through to output in the next few months.
Markets Live Strategist Garfield Reynolds says:
The narrative that the US president is again engaged in a negotiating tactic rather than serious threats means dip buyers will likely pile in. The more uncertain the trade path is, the more certain investors are that the impact will be minimal.
One positive to be taken away from the latest trade developments was that the higher tariffs won’t be in place during July. That means “an indirect extension” of the original 90-day pause that would expire on Wednesday, said Ian Lyngen and Vail Hartman at BMO Capital Markets.
“The outcome could certainly have been more dire for the economic outlook had the additional window of relief not been included in the latest trade-war salvo,” they noted.
Indian officials familiar with the matter said the nation had made its best offer on trade and the fate of an interim deal now lies in the hands of Trump. Negotiators conveyed to Washington the red lines they were unwilling to breach in finalizing an agreement, including allowing the US to export genetically modified crops to India, and opening up India’s dairy and automobile sectors to America.
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 9:53 a.m. Tokyo time
Japan’s Topix rose 0.2%
Australia’s S&P/ASX 200 was little changed
Euro Stoxx 50 futures fell 0.1%
Currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.3% to $1.1747
The Japanese yen was little changed at 145.95 per dollar
The offshore yuan was little changed at 7.1740 per dollar
Cryptocurrencies
Bitcoin rose 0.4% to $108,322.15
Ether rose 0.3% to $2,542.69
Bonds
The yield on 10-year Treasuries was little changed at 4.39%
Japan’s 10-year yield advanced two basis points to 1.475%
Australia’s 10-year yield advanced five basis points to 4.23%
Commodities
West Texas Intermediate crude fell 0.5% to $67.60 a barrel
Spot gold was little changed
