Asian Stocks Open Mixed on Fluctuating Tariff News
Asian stocks were set for a cautious open on Thursday after mixed signals from the Trump administration on its China tariff plans.
Global equities and long-term government bonds had risen on Wednesday on signs that U.S. President Donald Trump was rethinking the most aggressive elements of his stance on trade and the Federal Reserve. Some of that enthusiasm was tempered after Treasury Secretary Scott Bessent denied a Wall Street Journal report that the administration might cut tariffs on China.
Equity futures for Japan and Australia were set to rise on Thursday, while those in Hong Kong were set to fall. The S&P 500 rose 1.7% and the Nasdaq 100 gained 2.3%. A gauge of global stocks rose 1.5% on Wednesday to close at its highest in three weeks. Futures for U.S. equities were slightly higher in early Asian trade.
The improving mood on Wall Street was helped by a report that the U.S. would be willing to impose lighter tariffs on Beijing over five years. But the wild swings in markets since the April 2 announcement of the levies underscore a new reality for investors that U.S. trade policy tends to change without warning, making it impossible to make short-term predictions about where markets are headed.
"I suspect you're going to see more of this in the coming months as we see trade tensions escalate and recede until we get some sense of what the future looks like," said Brent Schutte at Northwestern Mutual Wealth Management.
Short-term Treasury yields rose on Wednesday while 10-year and 30-year yields fell after Trump eased concerns that he would fire Fed Chairman Jerome Powell. The dollar's strength index rose for a second session on Wednesday as the yen slid after Treasury Secretary Bessent said the U.S. would not pursue a specific exchange rate target in its talks with Japan. The Swiss franc, another safe-haven currency, also fell before edging higher Thursday morning in Asia. Trump said separately that the U.S. would have a fair deal with China and said Wednesday night in Washington that China might accept new tariffs in the next two to three weeks.
The Trump administration is also considering rolling back tariffs on auto parts ahead of a May 3 deadline, according to the Financial Times. Bessent added that the Trump administration is looking at many factors related to China beyond tariffs. He noted that the strongest relationship between Washington and Beijing was at the top, and there is no timeframe for engagement.
The latest developments boosted sentiment but provided little clarity for investors battered by weeks of tariff tensions between the world’s largest economies, raising fears of a global recession and a subsequent hit to corporate profits.
“Given our view that policy is driving the game, we don’t spend too much time trying to forecast the outlook for earnings or the economy,” said Michael Kantrowitz at Piper Sandler & Co. “As the policy backdrop becomes clearer, and less driving the market, estimates of the path of the economy and earnings going forward will once again become important.”
Source: Bloomberg
