Asia Share Markets, Dollar Wary On Tariff News
Asian share markets made a wary start to the week on Monday as investors navigated the shifting sands of White House tariff policy, while awaiting key U.S. jobs data and a widely expected cut in European interest rates.
There was little obvious reaction to President Donald Trump's threat late Friday to double tariffs on imported steel and aluminium to 50%, beginning on June 4, a sudden twist that drew the ire of European Union negotiators.
Speaking on Sunday, Treasury Secretary Scott Bessent said Trump would soon speak with Chinese President Xi Jinping to iron out a dispute over critical minerals.
White House officials continued to play down a court ruling that Trump had overstepped his authority by imposing across-the-board duties on imports from U.S. trading partners.
"The court ruling will complicate the path ahead on trade policy, but there remains an ample set of provisions available to the administration to deliver its desired results," said Bruce Kasman, chief economist at JPMorgan.
"There is a commitment to maintaining a minimum U.S. tariff rate of at least 10% and imposing further sector tariff increases," he added. "An increase in ASEAN to discourage transhipment looks likely, and the bias for higher tariffs on US-EU trade persists."
Markets will be particularly interested to see if Trump goes ahead with the 50% tariff on Wednesday, or backs off as he has done so often before.
In the meantime, caution reigned and MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab went flat. Japan's Nikkei (.N225), opens new tab fell 1.1%, while South Korean stocks (.KS11), opens new tab dipped 0.1%.
S&P 500 futures eased 0.2% and Nasdaq futures lost 0.3%. The S&P climbed 6.2% in May, while the Nasdaq rallied 9.6% on hopes final import levies will be far lower than the initial sky-high levels.
Front-running the tariffs has already caused wild swings in the economy, with a contraction in the first quarter likely turning into a jump this quarter as imports fall back.
The Atlanta Fed GDPNow estimate is running at an annualised 3.8%, though analysts assume this will slow sharply in the second half of the year.
Data this week on U.S. manufacturing and jobs will offer a timely reading on the pulse of activity, with payrolls seen rising 130,000 in May while unemployment stays at 4.2%.
Source: Reuters
