2 weeks Ago
Asian stocks advanced at the open after President Donald Trump paused import duties on a range of consumer electronics, lifting sentiment after a volatile week for markets. The dollar slipped. Shares in the region gained along with equity-index futures for the US and Europe early Monday as Trump paused some tech levies, though he indicated a specific tariff will be announced in due course.
Treasuries opened steady. The pause on duties on goods from smartphones to laptop computers and memory chips offers an interim reprieve for markets ravaged by Trump’s fast-evolving trade policy. Volatility shows little signs of easing after the president signaled separate duties on consumer electronics and microchips are being planned as Trump tries to rewrite global trade rules that he says aren’t in favor of the US.
“The amount of conflicting statements and policy-on-the run makes it impossible to trade short term,” said Matthew Haupt, a portfolio manager at Wilson Asset Management in Sydney. “The market is trying to look through the noise and assuming we will end up in a negotiated end game that is more favorable than current terms.” Trump pledged he will still apply tariffs to phones, computers and popular consumer electronics, downplaying a weekend exemption as a procedural step in his overall push to remake US trade.
The late-Friday reprieve — exempting a range of popular electronics from 125% tariffs on China and a 10% flat rate around the globe — is temporary and a part of the longstanding plan to apply a different, specific levy to the sector. Trump doubled down on the plan Sunday. A gauge of Asian technology shares rose 1.
5%, with gains for Sony Group Corp. and Samsung Electronics Co. “Markets are desperate to get some opportunistic optimism in and will take any relief they can find, especially when a large carveout such as electronics, is slated for lower lower tariffs,” said Singapore-based Vishnu Varathan, head of economics and strategy at Mizuho Bank.
The slight improvement to sentiment in Asia comes after the S&P 500 jumped 1.8% on Friday following a report that a Federal Reserve official said the central bank is ready to help stabilize markets, if needed. Still, US Treasury yields climbed Friday, with benchmark 10-year bonds capping their biggest weekly jump since 2001 as investors pulled back from US assets that are normally seen as a haven from financial turmoil.
Asian stocks slumped for a third week last week after Trump rapidly escalated his trade war with China while announcing he would delay his so-called reciprocal tariffs that adversely impacted the region. A pause in duties on consumer electronics indicates a willingness by Trump to compromise on a deal, according to some analysts. China said the reprieve is a small step toward rectifying the wrongdoings and urged Washington to do more to revoke the levies.
Chinese shares rose last week as expectations for stronger stimulus and hopes of an eventual deal outweighed concerns over a further escalation of trade tensions. Japan at the weekend said it wasn’t planning to use its US Treasury holdings as a negotiating tool to counter US tariffs. Some investors speculated that global reserve managers including China could be re-evaluating their positions in US government debt given the impact of Trump’s trade policies.
“Unfortunately, however, trade policy uncertainty continues to metastasize, creating issues not just for markets but also for foreign trading partners trying to cut deals in the next ninety days,” said Sarah Bianchi, a strategist at Evercore ISI, in a note Sunday..
