Asian shares slip amid worry about Trump’s tariff plans
However, weakness in Asian equities contrasts with gains for all three of the major Wall Street bourses overnight
27 November 2024 - 08:18
byKevin Buckland
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Pedestrians walk past an electric monitor displaying the Japanese yen exchange rate against the US dollar outside a brokerage in Tokyo. Picture: KIM KYUNG-HOON/REUTERS
Tokyo — Asian stocks were heavy on Wednesday as investors fretted over what countries could be targeted for tariffs under incoming US president Donald Trump, a day after he pledged new levies on Canada, Mexico and China.
The loonie and peso remained weak following sharp drops to multiyear lows on Tuesday, while the yuan edged back towards the previous session’s four-month trough.
Australia’s dollar, which is often used as a liquid proxy for the yuan given China is the country's biggest trading partner, also inched back towards Tuesday's four-month low.
However, the New Zealand dollar rebounded from its own multi-month lows after the country’s central bank opted to cut interest rates by 50 basis points on Wednesday, disappointing some in the market who had bet on a bigger reduction.
The safe-haven yen extended its strong run, climbing to a two-week high on the US dollar, which was in turn weighed down by sagging Treasury yields.
Japan’s Nikkei was a stand-out underperformer again on Wednesday, declining 0.9%. The autos sector was the worst-performing industry group on the Tokyo Stock Exchange, dropping more than 3% as both the threat of tariffs and the drag of a stronger yen weighed on the profit outlook.
Taiwanese stocks lost 0.2%, while South Korea’s Kospi rose less than 0.1%, struggling to bounce back from Tuesday’s 0.6% slide.
Mainland Chinese blue chips sank 0.4%, although Hong Kong’s Hang Seng managed a 0.1% rise.
MSCI’s broadest index of Asia-Pacific shares drooped 0.1%.
Weakness in Asian equities contrasts with gains for all three of the major Wall Street bourses overnight, and S&P 500 futures pointed to a further 0.1% advance.
Trump posted on his Truth Social platform early in Asia’s Tuesday that he would immediately put a 25% tariff on all products from Mexico and Canada upon taking office, and slap an additional 10% tariff on goods from China. He said those levies would remain until the countries clamped down on issues such as illicit drugs and migrants crossing US borders.
“The theme on the day has been to buy America, and for some to begrudgingly open a Truth Social account, with confirmation that headline risk and the communication channels for price discovery in markets have officially evolved,” said Chris Weston, head of research at Pepperstone.
Compared with Trump’s first time in office, “he is far more prepared, has a clear game plan, and has the legal passage to execute without constraint,” Weston said. “Markets now expect bold action ongoing, with the noise in markets officially increasing even before inauguration.”
The yuan weakened 0.1% to 7.2650/$ in offshore trading, heading back towards the low of 7.2730/$ seen on Tuesday.
The Mexican peso edged down to 20.7000/$, approaching the overnight trough at 20.8350/$.
Canada’s loonie also edged lower, though at C$1.40695 versus its US peer, there was more cushion from the knee-jerk low of C$1.4178 seen in the previous session.
The US dollar was more mixed against other major rivals, edging up to $1.0835/€ and easing slightly to $1.25725/£. It slipped 0.2% to ¥152.70, after earlier reaching its weakest since November 10 at ¥152.50.
US short-term Treasury yields edged lower to 4.2458%, extending this week’s pullback from Friday’s nearly four-month peak at 4.3810%.
Trading across markets is thinner than usual this week with the US Thanksgiving holiday on Thursday, and many investors extending their break into Friday. Traders are also keeping an eye on a reading of the Federal Reserve’s preferred inflation gauge, the PCE deflator, due later on Wednesday.
With the dust settling after the initial market frenzy following Trump’s tariff threat, “investors seems to view this as more tactical rather than fundamental, but enough to trigger risk off ahead of the long weekend”, said Shinji Ogawa, head of Japan cash equities sales at JPMorgan.
The New Zealand dollar added 0.4% to $0.5856, while the Australian dollar eased 0.1% to $0.6469.
Leading cryptocurrency bitcoin attempted to find its feet after a four-day retreat from a record high of $99,830. It was last up 1% at $92,630.
Gold ticked up 0.2% to $2,637/oz.
Oil prices continued to tick lower as markets assessed the potential effect of a ceasefire deal between Israel and Hezbollah, ahead of Sunday’s Opec+ meeting.
Brent crude futures fell 8c to $72.73 a barrel, while US West Texas Intermediate crude futures were at $68.68 a barrel, down 9c.
Both benchmarks started the week with declines of more than $2 following multiple media reports that the warring sides had agreed to terms of a ceasefire.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Asian shares slip amid worry about Trump’s tariff plans
However, weakness in Asian equities contrasts with gains for all three of the major Wall Street bourses overnight
Tokyo — Asian stocks were heavy on Wednesday as investors fretted over what countries could be targeted for tariffs under incoming US president Donald Trump, a day after he pledged new levies on Canada, Mexico and China.
The loonie and peso remained weak following sharp drops to multiyear lows on Tuesday, while the yuan edged back towards the previous session’s four-month trough.
Australia’s dollar, which is often used as a liquid proxy for the yuan given China is the country's biggest trading partner, also inched back towards Tuesday's four-month low.
However, the New Zealand dollar rebounded from its own multi-month lows after the country’s central bank opted to cut interest rates by 50 basis points on Wednesday, disappointing some in the market who had bet on a bigger reduction.
The safe-haven yen extended its strong run, climbing to a two-week high on the US dollar, which was in turn weighed down by sagging Treasury yields.
Japan’s Nikkei was a stand-out underperformer again on Wednesday, declining 0.9%. The autos sector was the worst-performing industry group on the Tokyo Stock Exchange, dropping more than 3% as both the threat of tariffs and the drag of a stronger yen weighed on the profit outlook.
Taiwanese stocks lost 0.2%, while South Korea’s Kospi rose less than 0.1%, struggling to bounce back from Tuesday’s 0.6% slide.
Mainland Chinese blue chips sank 0.4%, although Hong Kong’s Hang Seng managed a 0.1% rise.
MSCI’s broadest index of Asia-Pacific shares drooped 0.1%.
Weakness in Asian equities contrasts with gains for all three of the major Wall Street bourses overnight, and S&P 500 futures pointed to a further 0.1% advance.
Trump posted on his Truth Social platform early in Asia’s Tuesday that he would immediately put a 25% tariff on all products from Mexico and Canada upon taking office, and slap an additional 10% tariff on goods from China. He said those levies would remain until the countries clamped down on issues such as illicit drugs and migrants crossing US borders.
“The theme on the day has been to buy America, and for some to begrudgingly open a Truth Social account, with confirmation that headline risk and the communication channels for price discovery in markets have officially evolved,” said Chris Weston, head of research at Pepperstone.
Compared with Trump’s first time in office, “he is far more prepared, has a clear game plan, and has the legal passage to execute without constraint,” Weston said. “Markets now expect bold action ongoing, with the noise in markets officially increasing even before inauguration.”
The yuan weakened 0.1% to 7.2650/$ in offshore trading, heading back towards the low of 7.2730/$ seen on Tuesday.
The Mexican peso edged down to 20.7000/$, approaching the overnight trough at 20.8350/$.
Canada’s loonie also edged lower, though at C$1.40695 versus its US peer, there was more cushion from the knee-jerk low of C$1.4178 seen in the previous session.
The US dollar was more mixed against other major rivals, edging up to $1.0835/€ and easing slightly to $1.25725/£. It slipped 0.2% to ¥152.70, after earlier reaching its weakest since November 10 at ¥152.50.
US short-term Treasury yields edged lower to 4.2458%, extending this week’s pullback from Friday’s nearly four-month peak at 4.3810%.
Trading across markets is thinner than usual this week with the US Thanksgiving holiday on Thursday, and many investors extending their break into Friday. Traders are also keeping an eye on a reading of the Federal Reserve’s preferred inflation gauge, the PCE deflator, due later on Wednesday.
With the dust settling after the initial market frenzy following Trump’s tariff threat, “investors seems to view this as more tactical rather than fundamental, but enough to trigger risk off ahead of the long weekend”, said Shinji Ogawa, head of Japan cash equities sales at JPMorgan.
The New Zealand dollar added 0.4% to $0.5856, while the Australian dollar eased 0.1% to $0.6469.
Leading cryptocurrency bitcoin attempted to find its feet after a four-day retreat from a record high of $99,830. It was last up 1% at $92,630.
Gold ticked up 0.2% to $2,637/oz.
Oil prices continued to tick lower as markets assessed the potential effect of a ceasefire deal between Israel and Hezbollah, ahead of Sunday’s Opec+ meeting.
Brent crude futures fell 8c to $72.73 a barrel, while US West Texas Intermediate crude futures were at $68.68 a barrel, down 9c.
Both benchmarks started the week with declines of more than $2 following multiple media reports that the warring sides had agreed to terms of a ceasefire.
Reuters
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