Asian Stocks Set to Rise After Trump Delays Tariffs
Shares in Asia are set to rise after President Donald Trump delayed U.S. tariffs on Mexico and Canada for a month, and said he would hold further talks with China.
Equities opened higher in Sydney, while futures pointed to gains in Hong Kong and Tokyo. U.S. contracts rose after the S&P 500 on Monday pared most of its earlier decline of nearly 2%. The reversal came after Trump agreed to delay tariffs on Mexico following a conversation with his counterpart Claudia Sheinbaum, which in turn spurred a swift shift in currencies that saw a gauge of the dollar fall from its strongest level in more than two years and the yen pare a rally in a bid to find a safe haven. By mid-afternoon, Canada’s loonie rose after Justin Trudeau said U.S. tariffs would also be paused. “This is a very fluid and evolving situation,” said Victoria Greene at G Squared Private Wealth. “For now, our fundamental thesis is that most of this is temporary and will likely be further diluted with concessions.
We are following developments and watching how this could impact earnings, the U.S. dollar and inflation.” The delays with Mexico and Canada reinforce the view that Trump sees tariffs as a negotiating tactic — but is still reluctant to inflict economic hardship on Americans. His move to declare a state of emergency and impose tariffs on both countries and China was the broadest protectionist move by a U.S. president in nearly a century. Among the biggest uncertainties is how the resilient U.S. economy would handle the impact of a trade war, if one materializes.
Those concerns were evident in the bond market, where short-term Treasury yields rose while longer-term yields moved in the opposite direction. “While we believe that tariffs are primarily a negotiating tool for President Trump, it’s very hard to say whether these tariffs will be short-lived or if there’s a scenario where a deal is reached that reduces tariffs,” said Yung-Yu Ma at BMO Wealth Management.
The S&P 500 fell 0.8%. The Nasdaq 100 fell 0.8%. The “Magnificent Seven” index of large-cap stocks fell 1.7%. A gauge of U.S.-listed Chinese stocks pared earlier losses to fall 0.5%.
The Bloomberg Dollar Spot Index rose 0.2% on Monday after rising as much as 1.3% in its biggest intraday gain since the U.S. election.
Source: Bloomberg
