Despite Wall Street’s rally, Asian equities diverged on Tuesday as traders struggled to extend the gains. Investors were grappling with the ongoing impact of Donald Trump’s planned tariffs, as well as anticipation surrounding key US inflation data.
The tech sector’s surge, including major gains for Tesla and Nvidia, helped boost New York markets. Positive sentiment was driven by the White House’s suggestion that the upcoming tariffs would be less severe than initially feared. Trump has declared April 2 as “Liberation Day,” promising reciprocal tariffs aimed at correcting unfair trade practices.
Since returning to office in January, Trump has taken a hardline stance, causing uncertainty in global markets. Recently, he has hinted that some countries could be exempted or offered reductions, bringing hope to investors that the situation might ease.
Market analysts, however, predict that the tariffs may undergo changes after further negotiations. “The doom and gloom narrative, driven by politically biased surveys and negative opinion pieces, seems overblown,” said SPI Asset Management’s Stephen Innes. IG market analyst Tony Sycamore added, “The process will likely be more structured than past actions, with tariffs potentially negotiated down.”
However, Trump issued a warning to countries purchasing Venezuelan oil, threatening them with high tariffs, which could impact nations like China and India.
Asian stock markets showed mixed results. While Tokyo, Sydney, Singapore, Taipei, Jakarta, and Wellington saw gains, Shanghai remained flat, and both Bangkok and Manila declined. Hong Kong’s Hang Seng Index dropped 2.4%, largely due to a significant decline in Xiaomi’s stock following its $5.5 billion share sale to fund its electric vehicle expansion.
Traders also took profits from high-performing tech stocks, particularly after the Hang Seng’s impressive 20% rise this year.
In South Korea, the market fell despite Hyundai’s 3% surge, driven by a $21 billion US investment.
Attention is now focused on the upcoming release of the US personal consumption expenditure data, a key inflation metric for the Federal Reserve. The data will be closely watched for signs of inflationary pressure linked to Trump’s tariffs.
In related news, Atlanta Fed chief Raphael Bostic warned that the tariffs could likely prompt just one interest rate cut this year.
Key Market Figures Around 0700 GMT:
- Tokyo (Nikkei 225): +0.5% at 37,780.54 (close)
- Hong Kong (Hang Seng): -2.4% at 23,324.07
- Shanghai (Composite): Flat at 3,369.98
- Euro/USD: $1.0793 (down from $1.0805)
- Pound/USD: $1.2916 (down from $1.2924)
- Dollar/Yen: 150.45 yen (down from 150.58 yen)
- Euro/Pound: 83.59 pence (up from 83.58 pence)
- West Texas Intermediate: $68.97 per barrel (down 0.2%)
- Brent Crude: $72.23 per barrel (down 0.2%)
- New York (Dow): +1.4% at 42,583.32
- London (FTSE 100): -0.1% at 8,638.01
AFP
