Stocks improve in Asia after Donald Trump pauses some US tariffs
However, the off-again, on-again policy gyrations left investors confused and analysts bearish about the future
14 April 2025 - 07:58
byWayne Cole
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A man walks past an electronic screen outside a brokerage in Tokyo, Japan March 21, 2024. File photo: REUTERS
Sydney — Wall Street share futures rallied in Asia on Monday after the White House exempted smartphones and computers from “reciprocal” US tariffs, though gains were limited as President Donald Trump warned levies were still likely at some point.
Trump told reporters on Sunday tariffs on semiconductors would be announced over the next week and a decision on phones made “soon”.
On the face of it, the exemption of 20 product types accounting for 23% of US imports from China, was a boon to manufacturers. However, the off-again, on-again policy gyrations left investors confused and analysts bearish on the long run.
“The post-Liberation Day back-pedalling has led some to breathe a sigh of relief. Not us,” said Bruce Kasman, head of economics at JPMorgan.
“A 10% universal tax is still a very large shock and the huge 145% tax on China is prohibitive,” he added. “You cannot stop trade between the world’s two largest economies and not expect damage everywhere. We maintain our call for a 60% likelihood of a US/global recession.”
After an initial jump, S&P 500 futures pared gains to be up 0.8%, while Nasdaq futures rose 1.2%. The S&P 500 rallied 5.7% last week, but was still more than 5% below where it was before the reciprocal tariffs were first announced in early April.
Eurostoxx 50 futures firmed 2.6%, while FTSE futures added 1.8% and DAX futures 2.2%.
The market also has more earnings to weather this week with Goldman Sachs, Bank of America and Citigroup among the big banks reporting. Numbers from chipmaker TSMC will be a highlight given Trump's plan to investigate the entire global semiconductor supply chain.
Data out this week includes US retail sales and Chinese GDP, while Federal Reserve Chair Jerome Powell speaks on the economic outlook on Wednesday, when he will almost certainly be quizzed on the prospect of rate cuts and the recent stress in the Treasury market.
Early on Monday, there was scant sign of any recovery in bonds with 10-year yields at 4.48%, having seen the largest weekly rise in borrowing costs in decades.
Not so safe
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.6%, having shed more than 4% last week. Chinese blue chips gained 0.5%, with suppliers of Apple gear doing well.
Japan’s Nikkei added 1.6%, after fluctuating wildly in recent days in response to the changing tariff news.
Japanese officials are gearing up for trade negotiations with the US that will probably touch on currency policy, with some officials privately bracing for Washington to call on Tokyo to prop up the yen.
They might not need to work too hard given the dollar had taken a beating from worries the erratic nature of Trump’s trade policy was shaking investor faith in US assets.
“The key questions are about the indirect damage done through generating extreme uncertainty about the policy and economic outlook, the ongoing dislocations in the treasury market and, ultimately, undermining confidence in US institutions and asset markets,” said Jonas Goltermann, deputy chief markets economist at Capital Economics.
“It is no longer hyperbole to say that the dollar’s reserve status and broader dominant role is at least somewhat in question, even if the inertia and network effects that have kept the dollar on top for decades are not going away any time soon.”
The dollar was under pressure at ¥142.80 yen after hitting a six-month low at ¥142.05 last week. It was pinned at Sf0.8169, having shed more than 5% last week to the lowest in a decade.
The euro was up at $1.1384, just short of a three-year top of $1.1474. The European Central Bank meets on Thursday and is considered certain to cut rates by a quarter point to 2.25%.
Canada’s central bank also meets this week, and markets imply about a one-in-three chance it might trim its 2.75% rates.
In commodity markets, global uncertainty was proving a windfall to gold prices which surged to record peaks at $3,245/oz on Monday.
Oil has had a much tougher time amid fears of a global economic slowdown and increased supply from Opec, though it found some support from the risk of an end to Iran's exports.
Brent was down 17c at $64.59 a barrel, while US crude eased 15c to $61.35 per barrel.
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.
Stocks improve in Asia after Donald Trump pauses some US tariffs
However, the off-again, on-again policy gyrations left investors confused and analysts bearish about the future
Sydney — Wall Street share futures rallied in Asia on Monday after the White House exempted smartphones and computers from “reciprocal” US tariffs, though gains were limited as President Donald Trump warned levies were still likely at some point.
Trump told reporters on Sunday tariffs on semiconductors would be announced over the next week and a decision on phones made “soon”.
On the face of it, the exemption of 20 product types accounting for 23% of US imports from China, was a boon to manufacturers. However, the off-again, on-again policy gyrations left investors confused and analysts bearish on the long run.
“The post-Liberation Day back-pedalling has led some to breathe a sigh of relief. Not us,” said Bruce Kasman, head of economics at JPMorgan.
“A 10% universal tax is still a very large shock and the huge 145% tax on China is prohibitive,” he added. “You cannot stop trade between the world’s two largest economies and not expect damage everywhere. We maintain our call for a 60% likelihood of a US/global recession.”
After an initial jump, S&P 500 futures pared gains to be up 0.8%, while Nasdaq futures rose 1.2%. The S&P 500 rallied 5.7% last week, but was still more than 5% below where it was before the reciprocal tariffs were first announced in early April.
Eurostoxx 50 futures firmed 2.6%, while FTSE futures added 1.8% and DAX futures 2.2%.
The market also has more earnings to weather this week with Goldman Sachs, Bank of America and Citigroup among the big banks reporting. Numbers from chipmaker TSMC will be a highlight given Trump's plan to investigate the entire global semiconductor supply chain.
Data out this week includes US retail sales and Chinese GDP, while Federal Reserve Chair Jerome Powell speaks on the economic outlook on Wednesday, when he will almost certainly be quizzed on the prospect of rate cuts and the recent stress in the Treasury market.
Early on Monday, there was scant sign of any recovery in bonds with 10-year yields at 4.48%, having seen the largest weekly rise in borrowing costs in decades.
Not so safe
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.6%, having shed more than 4% last week. Chinese blue chips gained 0.5%, with suppliers of Apple gear doing well.
Japan’s Nikkei added 1.6%, after fluctuating wildly in recent days in response to the changing tariff news.
Japanese officials are gearing up for trade negotiations with the US that will probably touch on currency policy, with some officials privately bracing for Washington to call on Tokyo to prop up the yen.
They might not need to work too hard given the dollar had taken a beating from worries the erratic nature of Trump’s trade policy was shaking investor faith in US assets.
“The key questions are about the indirect damage done through generating extreme uncertainty about the policy and economic outlook, the ongoing dislocations in the treasury market and, ultimately, undermining confidence in US institutions and asset markets,” said Jonas Goltermann, deputy chief markets economist at Capital Economics.
“It is no longer hyperbole to say that the dollar’s reserve status and broader dominant role is at least somewhat in question, even if the inertia and network effects that have kept the dollar on top for decades are not going away any time soon.”
The dollar was under pressure at ¥142.80 yen after hitting a six-month low at ¥142.05 last week. It was pinned at Sf0.8169, having shed more than 5% last week to the lowest in a decade.
The euro was up at $1.1384, just short of a three-year top of $1.1474. The European Central Bank meets on Thursday and is considered certain to cut rates by a quarter point to 2.25%.
Canada’s central bank also meets this week, and markets imply about a one-in-three chance it might trim its 2.75% rates.
In commodity markets, global uncertainty was proving a windfall to gold prices which surged to record peaks at $3,245/oz on Monday.
Oil has had a much tougher time amid fears of a global economic slowdown and increased supply from Opec, though it found some support from the risk of an end to Iran's exports.
Brent was down 17c at $64.59 a barrel, while US crude eased 15c to $61.35 per barrel.
Reuters
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