Stocks drift, dollar steadies as focus shifts to Asian currencies
By Ankur Banerjee
SINGAPORE, May 6 (Reuters) – Global stocks held tight ranges on Tuesday and the dollar clawed back some of its recent losses against Asian counterparts as investors revived concerns about US tariffs and their impact on economic growth.
Those worries coupled with pledges from key oil producers to boost supply also kept crude prices languishing near four-year lows.
The focus in Asia has shifted to currencies following the Taiwan dollar's surge in recent sessions, which has stoked speculation that a revaluation of regional foreign exchange was on the cards to win US trade concessions.
Its rally suggested a big unwinding is under way and shines a light on one economy among many where years of big trade surpluses have built up large long dollar positions at exporters and insurers that are now under question and on edge.
The heat turned to Hong Kong on Tuesday, where the de facto central bank bought $7.8 billion to stop the local currency from strengthening and breaking its peg to the greenback.
'The real action today is in Asian FX,' said Charu Chanana, chief investment strategist at Saxo in Singapore.
'If these currencies keep strengthening sharply, it could spark fears of a 'reverse Asian currency crisis', with potential ripple effects in the bond market amid fears that Asian institutions reassess their unhedged exposure to Treasury holdings.'
On the mainland, China's yuan strengthened to its highest level since March 20 at 7.23 per dollar.
The Taiwan dollar was last at 30 per US dollar in early trading on Tuesday, not far from the near three-year high of 29.59 it touched on Monday as it jumped 8% over two days.
In stocks, MSCI's broadest index of Asia-Pacific shares outside Japan was 0.2% lower with Japan closed for a holiday. Taiwan stocks slipped 0.3%.
Chinese markets returned from a holiday with the blue-chip index opening slightly higher. Hong Kong's Hang Seng was down 0.2%.
Investor attention has been on the possibility of easing trade tensions between the US and China after Beijing last week said it was evaluating an offer from Washington to hold talks over tariffs.
But with few details, uncertainty has reigned with investors left trying to make sense of headlines coming out of the White House.
US President Donald Trump said on Sunday that Washington is meeting with many countries, including China, and that his main priority with China is to secure a fair deal.
Trump also on Monday slapped a 100% tariff on movies produced outside the United States but offered little clarity on how the levies would be implemented.
Saxo's Chanana said tariff headlines are doing more to drive market direction. 'And that means the tactical risk-reward could still be tilted to the upside with hard data holding up and sentiment buoyed by hopes of trade deals.'
Data on Monday showed the US services sector's growth picked up in April, while a measure of prices paid by businesses for materials and services raced to the highest level in more than two years, signaling a building up in inflation pressures due to tariffs.
Attention shifts to the Federal Reserve's policy decision on Wednesday, where the central bank is widely expected to keep rates steady but the spotlight will be on how policymakers are likely to navigate a tariff-ridden path.
'The markets want confirmation that the Fed intends to cut rates through any price shock that tariffs cause, just as is currently priced-in,' said Kyle Rodda, senior financial markets analyst at Capital.com.
Traders are pricing in 75 basis points of easing this year with the first move possibly in July, LSEG data showed.
In commodities, oil steadied on Tuesday after hitting four-year lows in the previous session that was driven by an OPEC+ decision to accelerate output increases.
Gold prices touched a one-week high on safe-haven demand.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
eNCA
3 hours ago
- eNCA
TikTok says to increase investment in Britain
TikTok plans to raise its investment in the UK, its biggest community in Europe, with the creation of 500 more jobs, the Chinese-owned social media giant announced Monday. The news coincided with the start of London's Tech Week, which sees British Prime Minister Keir Starmer welcoming some of sector's biggest firms. "TikTok's UK workforce will grow to 3,000 this year with the addition of more than 500 jobs," the company said in a statement. It added that it was investing in a new London office, set to open next year, and whose size will dwarf its current UK head office. It will take TikTok's investment in UK infrastructure to around £140 million ($190 million), the group said. Around half the UK population, more than 30 million people, use TikTok each month, making it the platform's "largest user-community in Europe", the statement added. "Whether through direct investment in jobs and innovation, or the wider economic contribution from millions of British businesses on TikTok, we're pleased to be increasing our investment and presence here in the UK," said Adam Presser, director of TikTok UK and global head of operations and trust and safety. TikTok has been in the crosshairs of Western governments for years over fears personal data could be used by China for espionage or propaganda purposes. "What underpins our continued growth is our deep commitment to safety and to creating an enjoyable and secure digital space to sustainably support creators, entrepreneurs and the wider economy, which is why we also invest significantly in safety," Presser added Monday.
eNCA
4 hours ago
- eNCA
US, China seek to extend trade truce with London talks
The United States and China are to sit down at the negotiating table in London on Monday to attempt to preserve a fragile truce on trade, despite simmering tensions. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer are leading the US delegation, President Donald Trump announced on Friday. Chinese Vice Premier He Lifeng -- who led Beijing's negotiating team at previous talks with the United States last month in Geneva -- would also head the team in London, China's foreign ministry announced at the weekend. "The meeting should go very well," Trump said on his Truth Social platform. His press secretary, Karoline Leavitt, told Fox News on Sunday: "We want China and the United States to continue moving forward with the agreement that was struck in Geneva." While the UK government reiterated that it was not involved in the content of the discussions in any way, a spokesperson said: "We are a nation that champions free trade." UK authorities "have always been clear that a trade war is in nobody's interests, so we welcome these talks," the spokesperson added. - Rare earths - The talks in London come just a few days after Trump and Chinese President Xi Jinping finally held their first publicly announced telephone talks since the Republican returned to the White House. Trump said the call, which took place on Thursday, had reached a "very positive conclusion." Xi was quoted by state-run news agency Xinhua as saying that "correcting the course of the big ship of Sino-US relations requires us to steer well and set the direction". The call came after tensions between the world's two biggest economies soared, with Trump accusing Beijing of violating a tariff de-escalation deal reached in Geneva in mid-May. "We need China to comply with their side of the deal. And so that's what the trade team will be discussing tomorrow," Leavitt said Sunday. A key issue in the negotiations will be Beijing's shipments of rare earths -- crucial to a range of goods including electric vehicle batteries and which have been a bone of contention for some time. "Rare earth shipments from China to the US have slowed since President Trump's 'Liberation Day' tariffs in April," said Kathleen Brooks, research director at trading group XTB. "The US wants these shipments to be reinstated, while China wants the US to rethink immigration curbs on students, restrictions on access to advanced technology including microchips, and to make it easier for Chinese tech providers to access US consumers," she added. In April, Trump introduced sweeping worldwide tariffs that targeted China most heavily. At one point the United States hit China with additional levies of 145 percent on its goods as both sides engaged in tit-for-tat escalation. China's countermeasures on US goods reached 125 percent. Then in Switzerland, after two days of talks, the two sides agreed to slash their staggeringly high tariffs for 90 days. But differences have persisted, including over China's restrictions on exporting rare earth minerals. The impact was reflected in the latest official export data released Monday in Beijing. Exports to the United States fell 12.7 percent on month in May, with China shipping $28.8 billion worth in goods last month. This is down from $33 billion in April, according to Beijing's General Administration of Customs. There is also huge uncertainty around the outcome of other trade disputes. - 'Green channel' - Throughout its talks with Washington, China has also launched discussions with other trading partners -- including Japan and South Korea -- in a bid to build a united front to counter Trump's tariffs. On Thursday, Beijing turned to Canada, with the two sides agreeing to regularise their channels of communication after a period of strained ties. Canadian Prime Minister Mark Carney and Chinese Premier Li Qiang also discussed trade and the fentanyl crisis, Ottawa said. Beijing has also proposed establishing a "green channel" to ease the export of rare earths to the European Union, and the fast-tracking approval of some export licenses. China is expected to host a summit with the EU in July, marking 50 years since Beijing and Brussels established diplomatic ties.
The South African
6 hours ago
- The South African
Large multinational company shuts factory in South Africa
It's sad news for the 78-year old Goodyear factory in South Africa. Last week it was announced that the large multinational will be close its Kariega plant in Nelson Mandela Bay. Without Goodyear, there will only be three international companies with a factory in South Africa: Continental, Sumitomo (Dunlop) and Bridgestone. The trading environment is becoming increasingly difficult for international tyre companies with manufacturing in South Africa. This is primarily due to high energy costs and cheap, sub-par Chinese imports being dumped in the country. Back in 2020, Bridgestone came close to shutting its Brits factory in South Africa. Likewise, Sumitomo was forced into restructuring at its Ladysmith plant in KwaZulu-Natal earlier this year, in February. Nevertheless, the local tyre manufacturers that remain are all part of larger global organisations that feed the rest of Africa. As such, they employ around 5 000 workers collectively, and are responsible for more than 7-million tyres annually, says the South African Tyre Manufacturing Conference (SATMCC). Sadly, the Goodyear factory in South Africa has been in operation since 1947. It employs in the region of 900 workers. The firm announced the closure in a general statement last week, on Thursday 5 June 2025. It said Goodyear South Africa will transform to a 'go-to-market' to optimise its footprint and portfolio, reports TopAuto. Cheap Chinese imports are being challenged by the competition commission. Image: File 'As part of that transformation, Goodyear South Africa is launching a restructuring process in accordance with the provisions of the Labour Relations Act. To address the closure of the factory in South Africa, it will realign sales, administration and general management functions. As such, Goodyear South Africa will continue to maintain sales, distribution and retail presence in South Africa through Hi-Q,' confirms the statement. Goodyear says closing the factory in South Africa is in no way a reflection of the efforts and years of dedication. Therefore, it says it is committed to acting fairly and providing affected employees with appropriate support. As such, the reorganisation process will be overseen by the Commission for Conciliation, Mediation, and Arbitration (CCMA). There are also job loss mitigation initiatives in place with the Nelson Mandela Bay Business Chamber to assist those who have been made redundant. Experts says unreliable electricity supply, above-inflation cost increases and cheap Chinese imports have all contributed to tough trading conditions for local tyre manufacturers over the last five years. It's a shame to see hard-working South Africans losing jobs … Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1. Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
