Asian Stocks Rise After Trump Tariff Delay
Asian stocks were set to rise on Thursday after Wall Street rallied as U.S. President Donald Trump agreed to delay new levies imposed on Mexico and Canada by automakers. German bonds sold off sharply on higher defense spending.
Equity futures for Japan and Hong Kong rose, while Australian shares were little changed. The S&P 500 ended Wednesday up 1.1%, while the tech-heavy Nasdaq 100 gained 1.4%. A gauge of U.S.-listed Chinese companies rose 6.4%, its biggest gain in three months.
The dollar index fell 1% on Wednesday, falling against most major currencies, with losses particularly heavy against the euro. The yen rose about 0.6% to just below 149 per dollar. The White House said auto tariffs on Mexico and Canada would face a one-month delay. After talks with Canadian Prime Minister Justin Trudeau, White House press secretary Karoline Leavitt said Trump was open to hearing about additional tariff exemptions.
Tariff relief “in the form of a real deal would be the best-case scenario for equities,” said Kevin Brocks, director at 22V Research, but cautioned that “continued uncertainty is a drag on the economy in itself.” U.S. Treasury bonds edged lower, pushing the 10-year U.S. Treasury yield up three basis points to 4.28%, while European bonds plunged. The benchmark 10-year German Treasury yield jumped 30 basis points, the most since 1990, after Chancellor-designate Friedrich Merz outlined a major fiscal overhaul late Tuesday.
The euro strengthened to levels not seen since November. The sharp moves in Europe came as Germany said it would spend hundreds of billions of euros on defense and infrastructure investments in a dramatic shift that upends its tight controls on government borrowing. In Asia, data due out includes unemployment in the Philippines, inflation in Vietnam and an interest rate decision in Malaysia.
In China, officials announced an expansion target of around 5% for 2025 at its annual parliamentary session Wednesday, marking the first time in more than a decade that Beijing has set the same goal for three straight years. President Xi Jinping signaled China’s determination to press ahead with its ambitious growth goals this year, despite the trade war.
Later on Thursday, the European Central Bank and its Turkish counterpart will hand down their interest rate decisions. U.S. data expected Thursday includes initial jobless claims ahead of Friday’s monthly payrolls figures. Options traders expect the S&P 500 to move 1.3% in either direction, which would be the biggest move for any business day since the regional bank’s March 2023 turmoil.
Benign oil prices fell more than 2% on Wednesday as traders weighed the impact of U.S. tariffs on demand with signs from OPEC+ that it could increase supply.
Source: Bloomberg
