Asian Markets in Full Swing as Investors Shake Off Trade Jitters
(Bloomberg) -- Trading desks across Asia are buzzing with excitement again, as the region shakes off tariff shocks and attracts investors with its solid growth prospects.
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From stocks to currencies to credit, the rebound from the depths of the April market turmoil has been impressive. MSCI's Asia equities index has jumped 25% to a four-year high, while a slump in the dollar has powered a regional currency gauge to the strongest since October. Companies are rushing to raise money to capitalize on the market's reawakening.
It marks a sharp reversal from the jitters that prevailed just a couple of months ago, when fears of a full-blown trade war and concerns that runaway inflation will limit central banks' policy room weighed heavily on Asian assets. Instead, a weakening dollar has created space for interest-rate cuts across the region, with the Federal Reserve's widely-expected easing likely to provide additional tailwinds.
'Stocks have bounced back strongly from their April bottom, and investors are realizing they might have been too pessimistic about Trump's tariffs,' said Tomo Kinoshita, global market strategist at Invesco Asset Management. 'Investors are realizing they might have been too pessimistic about tariffs,' he said. 'Trump is showing more flexibility around his trade policies, and that's driving optimism.'
Take the demand for blockbuster share sales from Hong Kong to Tokyo as an example of the palpable excitement. So far, such deals across the region including initial public offerings have raised more than $90 billion, a 25% jump from this time last year, data compiled by Bloomberg show.
While Hong Kong has dominated larger deals, Japan's capital market has also hummed along with this week, seeing the highest IPO volume since mid-March.
Debt capital markets have also roared back to life after a dearth of deals at the height of volatility. Yield premiums on Asian investment-grade dollar bonds have come down from an April high of over 100 basis points to near 76 basis points, not far off a record low reached in February, a Bloomberg index shows.
The tightening of Asian spreads is all the more impressive given a surge in dollar bond sales from the region, with this week seeing the largest volume of deals since March. Asia Pacific offerings in the US currency have climbed by about 45% this year to more than $200 billion.
To be sure, the recent rebound has been global, as markets around the world enjoyed a relief rally. US stocks have also regained their mojo as the 'sell America' trade lost steam. The Nasdaq 100 is at a fresh record and the S&P 500 is just shy of its February peak.
Asian markets may face fresh volatility in the coming weeks. US Commerce Secretary Howard Lutnick told Bloomberg Television that President Donald Trump was prepared to finalize a slate of trade deals in connection with a July 9 deadline to reinstate higher tariffs he paused in April.
'Given what we've been through in the last few months, I can't help but think that there are a few more twists to come,' said Nick Twidale, chief analyst at AT Global Markets in Sydney. 'The trade news is the most important factor for Asian markets.'
Despite the looming uncertainties, the extent of resurgence in Asia's export-reliant economies speaks to the region's resilience. A softer dollar has bolstered the case for owning Asian assets. A Bloomberg dollar index is set for a sixth straight month of losses, the worst streak since 2017.
Asian sovereign bonds have enjoyed a surge in inflows as investors looked to diversify and the region's central banks embarked on interest-rate cuts. South Korea has especially stood out, receiving over $40 billion so far in 2025, according to Bloomberg-compiled data. Local factors such as the removal of political uncertainty following the election of a new president have helped.
'When I think about allocating to Asia, I think about the balance and defensiveness that it offers to the portfolio,' said Leonard Kwan, portfolio manager for T. Rowe Price in Hong Kong. 'It's a region that has got better fiscal and external positioning for the countries.'
--With assistance from Finbarr Flynn, Malavika Kaur Makol and Yasutaka Tamura.
(Updates with latest on trade deals in 10th paragraph, new comment in 11th.)
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