Japan's Nikkei surges to one-year peak, bonds slide on US trade deal
The Nikkei rallied as much as 3.3 per cent to 41,070.91, its highest since July last year. The Tokyo Stock Exchange's transport equipment index soared 10.3 per cent, with Toyota Motor surging more than 13 per cent.
The trade deal reduced economic uncertainty, bolstering the case for the Bank of Japan to resume raising interest rates.
Traders sold Japanese government bonds, pushing two-year yields up by 7 basis points (bps) to 0.82 per cent, the highest since April 2, when U.S. President Donald Trump shocked markets with his aggressive "Liberation Day" tariff announcement.
Markets largely shrugged off a media report that Japanese Prime Minister Shigeru Ishiba would step down by the end of August.
Ishiba is facing growing opposition from within his Liberal Democratic Party for his vow to stay in power despite the ruling coalition's defeat in Sunday's upper house election.
The yen was last down about 0.2 per cent at 146.96 per dollar.
Trump said on Tuesday the U.S. and Japan had struck a trade deal that includes a 15 per cent tariff that will be levied on U.S. imports from the Asian country, down from a threatened tariff of 25 per cent.
Industry and government officials briefed on the agreement said the deal also lowers the tariff to 15 per cent from 25 per cent on Japanese autos, which account for more than a quarter of the country's exports to the U.S.
"It is commendable that the 25 per cent baseline tariff was avoided," said Norihiro Yamaguchi, senior Japan economist at Oxford Economics in Tokyo. "Lowered uncertainty will be welcomed in the equity market."
Bank shares gained, sending the TSE's banking index up 4.5 per cent.
The 10-year JGB yield jumped 9.5 bps to 1.595 per cent, matching last week's 17-year high.
Ten-year Japanese government bond futures tumbled as much as 1.04 yen to 137.56 yen, their lowest since March 28.
Deputy BOJ Governor Shinichi Uchida said the central bank needs to focus on downside risks to the economy. His comments came ahead of a BOJ policy meeting next Wednesday and Thursday.
"I don't think this (trade deal) alone will lead to a Bank of Japan rate hike next week, but the possibility of a rate hike between September and October has increased," said SMBC chief currency strategist Hirofumi Suzuki. "This will create pressure to buy the yen."
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CNA
3 minutes ago
- CNA
As furniture buyers turn to Shopee and Taobao, local brands struggle to compete
SINGAPORE: When first-time home owners Nurasheila Abdul Razak and Syakir Sabirin were searching for furniture to match the Japanese wabi-sabi theme they had in mind for their new flat, time was in short supply. Working different shifts as technicians while caring for their toddler, the couple found it difficult to shop for furniture. That changed when they discovered Chinese e-commerce platform Taobao. 'On Taobao, we can just sit at the table, browse and everything will come at the same time,' said Mr Syakir, 33. Despite the language barrier – they relied on Google Translate to navigate the site – the couple ended up buying about 90 per cent of their furniture on Taobao. They are part of a growing group of younger home owners in Singapore who are buying most of their furniture from online platforms for their lower prices, greater convenience and wider selection. Taobao, owned by Chinese e-commerce giant Alibaba, has seen rising interest from Singaporeans for its home and furniture products, said Ms Miko Tse, the head of marketing at Taobao Singapore. While she did not disclose specific figures, she said the category has seen 'strong double-digit year-over-year growth', helped by the launch of the site's English version. Shopee Singapore has also seen rapid growth in the category. Its director, Mr Chua Kel Jin, said furniture and home living is now one of the platform's fast-growing segments. Over the past five years, buyer numbers have doubled and sales have tripled, he said, without revealing exact figures. TOUGH COMPETITION Prices on e-commerce platforms are often significantly lower – sometimes up to three times cheaper than local brands, home owners told CNA. Ms Nurasheila said a customisable electric sofa she bought on Taoabo cost about S$1,200 (US$940) before shipping. A similar item in a local store had a price tag of over S$3,000, the 29-year-old pharmacy technician said. Even after paying for shipping and hiring a handyman to assemble the pieces, the couple estimated they spent just S$6,000 to furnish their home. Local furniture brand Cellini said such pricing could lead to a 'race to the bottom' and put immense pressure on Singapore companies that struggle to meet these cost expectations. 'The pie of furniture sales is no longer exclusively divided among local brick-and-mortar stores but is now significantly shared with online powerhouses,' said its marketing manager Kerine Yong. Mr Joshua Koh, CEO of homegrown furniture brand Commune, said that the increased access to platforms like Taobao has changed the retail landscape. 'In the past, factories sold to retailers who would sell the furniture at a markup. But now, the factories have bypassed that middleman and gone online and started selling direct to consumers,' said Mr Koh, who is also the president of the Singapore Furniture Industries Council. Adding to the challenge, retailers in Johor Bahru are also aggressively courting Singapore consumers, with lower prices enabled by lower operating costs, he said. 'So we are being hit by many fronts, not only the Chinese e-commerce supply.' BIG SPACES, HIGH RENT Local furniture companies said they have to grapple with high rental costs for their warehouses and showrooms, even though most of them have offshored their manufacturing process to neighbouring Southeast Asian countries. Mr Ahmad Habshee, 36, the founder of woodworking brand Urban Salvation, runs a 4,000 sq ft studio and showroom in an industrial estate in Tampines. He recently downsized to one unit to cut costs. 'The location that I have is very secluded, because it's cheaper here. To survive longer, you cannot have high rent,' he said. Professor Lawrence Loh, who teaches policy and strategy at the National University of Singapore, said many local furniture brands are now in a 'precarious position'. 'Many might actually end up being free showrooms for people who want to go online,' he said. 'People can get a look and feel of what type of furniture they want. Then they check the dimension … and just go online and replicate,' he said. Account manager Lim Huiyi, 30, and her husband did exactly that when they were furnishing their new home a year ago, using local stores for inspiration before doing reverse image searches on Taobao. 'We will just snap a picture … and then put it on Taobao,' she said. 'Sometimes, it looks like basically the same thing for a fraction of the price.' Apart from a TV console that they purchased from Johor Bahru, all their movable furniture was purchased online. Affordability, variety and convenience are key draws for shopping online, home owners said. 'You can search for so many things, and you can see so many different options at once, versus in Singapore, when you go to a furniture store, you are pretty much bound to how much it can feature in that little space,' said Ms Lim. Getting to furniture showrooms, which are often in remote areas, can be expensive and inconvenient, she added. Another home owner who wanted to be known only as Ms Tan said she and her husband browsed local shops but couldn't find anything that caught their eye. 'Everything was very repetitive … We wanted to have something more unique,' the 32-year-old said. Buying online did not mean compromising on quality either, said Ms Tan, who works in sales. Having lived with mostly Taobao furniture for the past two years, she said the quality has exceeded her expectations. BUY AND THROW AWAY Ms Faezah Shaharuddin, co-director of family business Gamar Furniture, said younger buyers are more trend-focused, which platforms like Shopee and Taobao cater to. She added that slow furniture brands like hers have to 'straddle the line' between quality and trends. 'There's a sustainability aspect to it too. We don't want to become like fast furniture, because we do think it's a bit wasteful, and it's also very expensive and exhausting trying to keep up with the trend cycles,' she said. Mr Ahmad said brands like his that champion circularity are struggling to survive a "buy and throw" mindset. Still, he understands why people shop online. 'Renovation is expensive in Singapore. House is expensive in Singapore. Furniture is just pure aesthetics for some people. Can use can lah, right?' he said. Mr Morgan Yeo, director of family-owned furniture brand Roger&Sons, said many buyers see furniture as temporary – tied to the lifespan of a BTO flat. 'To them, they don't think that they will stay there for a long time,' he said. 'So why spend the amount of money?' Yet this mindset leads to significant waste, he added. 'We only worry about the straws and the paper cups and the plastic bags,' he said. 'But we don't think about the waste we generate when we move into a house.' A HUMAN TOUCH Dr Seshan Ramaswami, associate professor of marketing at Singapore Management University, said retailers need to be "extremely service-oriented" and offer customers a one-stop solution for all their furnishing needs. Assistant Professor Soo Kim from Nanyang Technological University (NTU) business school said homegrown furniture brands have to offer customers something they cannot get from online shopping. Physical showrooms should not just be a place to browse and buy, but a destination with a "human touch", she added. Gamar's Ms Faezah said her brand retains loyal clients who appreciate face-to-face service. 'There's a warmth to shopping in person, and we have a lot of long-time clients that we built personal relationships with. That kind of thing can't really be felt online,' she said. Some brands are also investing in their online presence. At Cellini, Ms Yong said enhancing the online experience while maintaining physical showrooms has become essential. 'It's about delivering meaningful value and an exceptional experience. It's never just about a product,' she said. Roger&Sons, however, has no intention to move to the e-commerce space. Making quality furniture takes time, Mr Yeo said. 'The only way you can digitalise carpentry is if you mass produce the same type of chairs … Every chair that we do is different.' Home owners Ms Nurasheila and Mr Syakir said they remain open to "all options" for their future furniture choices – depending on price and convenience. But they are not planning to replace what they have bought anytime soon. 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Straits Times
28 minutes ago
- Straits Times
US and EU clinch deal with broad 15% tariffs on EU goods to avert trade war
TURNBERRY, Scotland - The United States struck a framework trade deal with the European Union on Sunday, imposing a 15 per cent US import tariff on most EU goods, but averting a spiralling battle between two allies which account for almost a third of global trade. The announcement came after European Commission President Ursula von der Leyen travelled for talks with US President Donald Trump at his golf course in western Scotland to push a hard-fought deal over the line. 'I think this is the biggest deal ever made,' Trump told reporters after an hour-long meeting with von der Leyen, who said the 15 per cent tariff applied 'across the board'. 'We have a trade deal between the two largest economies in the world, and it's a big deal. It's a huge deal. It will bring stability. It will bring predictability,' she said. The deal, that also includes US$600 billion (S$768 billion) of EU investments in the United States and significant EU purchases of US energy and military equipment, will indeed bring clarity for EU companies. However, the baseline tariff of 15 per cent will be seen by many in Europe as a poor outcome compared to the initial European ambition of a zero-for-zero tariff deal, although it is better than the threatened 30 per cent rate. The deal mirrors parts of the framework agreement the United States clinched with Japan last week. Top stories Swipe. Select. Stay informed. Singapore Sewage shaft failure linked to sinkhole; PUB calling safety time-out on similar works islandwide Singapore Tanjong Katong Road sinkhole did not happen overnight: Experts Singapore Workers used nylon rope to rescue driver of car that fell into Tanjong Katong Road sinkhole Asia Singapore-only car washes will get business licences revoked, says Johor govt World Food airdropped into Gaza as Israel opens aid routes Sport Arsenal beat Newcastle in five-goal thriller to bring Singapore Festival of Football to a close Singapore Benchmark barrier: Six of her homeschooled kids had to retake the PSLE Asia S'porean trainee doctor in Melbourne arrested for allegedly filming colleagues in toilets since 2021 'We are agreeing that the tariff... for automobiles and everything else will be a straight across tariff of 15 per cent,' Trump said. However, the 15 per cent baseline rate would not apply to steel and aluminium, for which a 50 per cent tariff would remain in place. Trump, who is seeking to reorder the global economy and reduce decades-old US trade deficits, has so far reeled in agreements with Britain, Japan, Indonesia and Vietnam, although his administration has failed to deliver on a promise of '90 deals in 90 days.' He has periodically railed against the European Union saying it was 'formed to screw the United States' on trade. Arriving in Scotland, Trump said that the EU wanted 'to make a deal very badly' and said, as he met von der Leyen, that Europe had been 'very unfair to the United States'. His main bugbear is the US merchandise trade deficit with the EU, which in 2024 reached $235 billion, according to US Census Bureau data. The EU points to the US surplus in services, which it says partially redresses the balance. Trump also talked on Sunday about the 'hundreds of billions of dollars' that tariffs were bringing in. On July 12, Trump threatened to apply a 30 per cent tariff on imports from the EU starting on August 1, after weeks of negotiations with the major US trading partners failed to reach a comprehensive trade deal. The EU had prepared countertariffs on 93 billion euros (S$139 billion) of US goods in the event there was no deal and Trump had pressed ahead with 30 per cent tariffs. Some member states had also pushed for the bloc to use its most powerful trade weapon, the anti-coercion instrument, to target US services in the event of a no-deal. REUTERS
CNA
an hour ago
- CNA
EU, US strike 'biggest-ever' trade deal
TURNBERRY, United Kingdom: The United States and European Union on Sunday (Jul 27) clinched what President Donald Trump described as the "biggest-ever" deal to resolve a transatlantic tariff stand-off that threatened to explode into a full-blown trade war. Trump emerged from a high-stakes meeting with European Commission President Ursula von der Leyen at his golf resort in Scotland to announce that a baseline tariff of 15 percent would be levied on EU exports to the US. The deal, which the leaders struck in around an hour, came as the clock ticked down on an Aug 1 deadline to avoid an across-the-board US levy of 30 percent on European goods. "We've reached a deal. It's a good deal for everybody. This is probably the biggest deal ever reached in any capacity," said Trump. Trump said the 15-percent tariff would apply across the board, including for Europe's crucial automobile sector, pharmaceuticals and semiconductors. As part of the deal, Trump said the 27-nation EU bloc had agreed to purchase "US$750 billion worth of energy" from the United States, as well as make US$600 billion in additional investments. Von der Leyen said the "significant" purchases of US liquefied natural gas, oil and nuclear fuels would come over three years, as part of the bloc's bid to diversify away from Russian sources. Negotiating on behalf of the EU's 27 countries, von der Leyen had been pushing hard to salvage a trading relationship worth an annual US$1.9 trillion in goods and services. "It's a good deal," the EU chief told reporters. "It will bring stability. It will bring predictability. That's very important for our businesses on both sides of the Atlantic," she said. She said bilateral tariff exemptions had been agreed on a number of "strategic products," notably aircraft, certain chemicals, some agricultural products and critical raw materials. Von der Leyen said the EU still hoped to secure further so-called "zero-for-zero" agreements, notably for alcohol, which she hoped to be "sorted out" in coming days. Trump also said EU countries, which recently pledged to ramp up their defence spending within NATO, would be purchasing "hundreds of billions of dollars worth of military equipment." 'Best we could get' The EU has been hit by multiple waves of tariffs since Trump reclaimed the White House. It is currently subject to a 25-percent levy on cars, 50 percent on steel and aluminium, and an across-the-board tariff of 10 percent, which Washington threatened to hike to 30 percent in a no-deal scenario. The bloc had been pushing hard for tariff carve-outs for critical industries from aircraft to spirits, and its auto industry, crucial for France and Germany, is already reeling from the levies imposed so far. "Fifteen percent is not to be underestimated, but it is the best we could get," acknowledged von der Leyen. Any deal will need to be approved by EU member states, whose ambassadors, on a visit to Greenland, were updated by the commission Sunday morning. They were set to meet again after the deal struck in Scotland. German Chancellor Friedrich Merz rapidly hailed the deal, saying it avoided "needless escalation in transatlantic trade relations". The EU had pushed for a compromise on steel that could allow a certain quota into the United States before tariffs would apply. Trump appeared to rule that out, saying steel was "staying the way it is", but the EU chief insisted later that "tariffs will be cut and a quota system will be put in place" for steel. 'The big one' While 15 percent is much higher than pre-existing US tariffs on European goods, which average around 4.8 percent, it mirrors the status quo, with companies currently facing an additional flat rate of 10 percent. Had the talks failed, EU states had greenlit counter tariffs on US$109 billion of US goods including aircraft and cars to take effect in stages from Aug 7. Trump has embarked on a campaign to reshape US trade with the world, and has vowed to hit dozens of countries with punitive tariffs if they do not reach a pact with Washington by Aug 1.
