Asia shares ease, euro flatlines as tariff costs counted
The initial relief over Europe's 15 per cent levy quickly soured when set against the 1 per cent to 2 per cent that stood before President Donald Trump took office. Leaders in France and Germany lamented the outcome as a drag on growth, pulling down stocks and bond yields across the continent while slugging the single currency.
Trump also flagged a "world tariff" rate of 15 per cent to 20 per cent on all trading partners that were not negotiating a deal, among the highest rates since the Great Depression of the 1930s.
"While the worst case scenario was averted, the implied EU tariff increase from 1 per cent in January is a significant tax increase on EU exports," wrote economists from JPMorgan in a note.
"This is a very big shock that unwinds a century of U.S. leadership in global free trade," they warned. "While we no longer see a U.S. recession as our baseline from this shock, the risk is still elevated at 40 per cent."
A further risk to world growth came from a sudden spike in oil prices after Trump threatened a new deadline of 10 or 12 days for Russia to make progress toward ending the war in Ukraine or face tougher sanctions on oil exports.
The air of caution saw MSCI's broadest index of Asia-Pacific shares outside Japan slip 0.8 per cent. Japan's Nikkei lost 0.9 per cent, while Chinese blue chips were flat.
European shares steadied after Monday's sell-off. EUROSTOXX 50 futures, FTSE futures and DAX futures all edged up around 0.2 per cent.
The euro was flat at $1.1587, after falling 1.3 per cent overnight in the largest drop since mid-May. It now has chart support at $1.1556.
The dollar index was up at 98.675, after the rush out of short dollar positions lifted it 1 per cent overnight, while it eased a one-week high on the yen to stand at 148.27.
Wall Street held firm on hopes for upbeat results from mega caps this week that include Apple, Meta Platforms, Microsoft and Amazon.
S&P 500 futures nudged up 0.1 per cent, while Nasdaq futures added 0.2 per cent.
Yields on 10-year Treasuries held at 4.408 per cent having crept higher on Monday as markets braced for another steady decision on interest rates from the Federal Reserve.
Futures imply a 97 per cent chance the Fed will keep rates at 4.25 per cent-4.5 per cent at its meeting on Wednesday and reiterate concerns that tariffs will push inflation higher in the short term.
Analysts also assume one, or maybe two, Fed officials will dissent in favour of a cut and supporting wagers for a move in September.
The odds could change depending on a slew of U.S. data this week including gross domestic product for the second quarter where growth is seen rebounding to an annualised 2.4 per cent, after a 0.5 per cent contraction in the first quarter.
Figures on job openings are due later on Tuesday that will help refine forecasts for the crucial payrolls report on Friday.
Canada's central bank also meets on Wednesday and again is widely expected to hold rates at 2.75 per cent as it waits to see how trade talks with the U.S. wash out.
In commodity markets, prices for copper and iron ore were under pressure while gold idled at $3,315 an ounce.
Brent was off a fraction at $69.90 a barrel, having climbed 2.3 per cent on Monday, while U.S. crude held at $66.60.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
4 minutes ago
- Straits Times
‘Not chickened out': Trump stakes reputation as dealmaker with tariff policy
Sign up now: Get ST's newsletters delivered to your inbox US President Donald Trump boarding Air Force One on his way to New Jersey on Aug 1. WASHINGTON - Donald Trump is staking his reputation as a tough negotiator and slick dealmaker – that has served him well throughout his life – with his ultra-muscular, protectionist tariffs policy. On Aug 1, the White House released a picture of the US president seen with a smartphone pressed to his ear, with the caption: 'Making calls. Making deals. MAKING AMERICA GREAT AGAIN!' Every trade deal announced by the president, who is convinced that tariffs are both a tool and manifestation of America's economic might, is celebrated by his supporters as a show of his negotiating prowess. This week's flurry of rate changes was no different. On July 31, with the stroke of a black marker, the former real estate developer slapped fresh tariffs on dozens of US trade partners . They will kick in on Aug 7 instead of Aug 1, which had previously been touted as a hard deadline. The Republican leader's backtracking, frequently setting trade deadlines only to rescind or extend them – he most recently granted Mexico a 90-day extension – has given rise to the mocking acronym 'Taco' ('Trump always chickens out'). Top stories Swipe. Select. Stay informed. Singapore New vehicular bridge connecting Punggol Central and Seletar Link to open on Aug 3 Singapore Tengah facility with over 40 animal shelters, businesses hit by ticks Singapore 60 years of building Singapore Asia 'Every day, we think about how to upgrade': China's factories see rise in robot adoption Singapore Sheng Siong to open first store in Orchard by end-August Sport Spurs captain Son Heung-min says he is leaving the English Premier League club Life Tastemakers: Burnt-out serial entrepreneur cooks up $16m success with Lau Wang Claypot Delights Asia 'This isn't some concubine selection': Why matchmaking events for rich Chinese have drawn flak The jokes implying Mr Trump is all talk and no action on trade have previously struck a nerve for the president. 'Not chicken' But analysts believe there will be no going back this time. Mr Trump has 'not chickened out,' according to Mr Josh Lipsky, an international economics expert at the Atlantic Council think tank. He told AFP the president is 'following through, if not exceeding' what he vowed during his campaign in respect to tariffs. Mr Matthew Aks, a public policy analyst at Evercore ISI, said he did not anticipate a 'massive shift' on the latest order, aside from some economies like Taiwan or India striking deals during the seven-day buffer. Following crunch negotiations leading up to the tariffs announcement, Mr Trump struck a series of compromises, notably with the European Union, Japan, and South Korea, setting varying tax rates and touting high investments in the United States. The details of these agreements remain vague and leave the door open to key questions: Are exemptions possible? What will become of key sectors like automobiles, pharmaceuticals, semiconductors? And what of China? The US president and leaders of other countries 'have reasons to avoid going into detailed agreements' explained Mr Aks, allowing all sides to present the deals in the most positive, or least negative, way possible to their public. The ability to conclude deals – often with or without crucial detail – is, for the 79-year-old Republican, an integral part of his political signature. 'Art form' In his book The Art Of The Deal, the billionaire wrote: 'Deals are my art form. Other people paint beautifully on canvas or write wonderful poetry. I like making deals, preferably big deals. That's how I get my kicks.' He explained in his book that he always 'protects' himself 'by being flexible'. 'I never get too attached to one deal or one approach.' But despite comments about his trade policy reversals, Mr Trump has hardly budged from his trade strategy, and that could prove politically painful. In a survey conducted by Quinnipiac University published in mid-July, only 40 per cent of respondents said they supported the president's trade policy, while 56 per cent criticised it. The latest employment figures bear the marks of Mr Trump's protectionist offensive, according to experts. Job creation in May and June was revised sharply downward, falling to levels not seen since the Covid-19 pandemic. AFP
Business Times
2 hours ago
- Business Times
India aghast at Donald Trump's ‘dead' economy jibe, 25% tariffs
[MUMBAI] Shock, dismay and angst swept across India as businesses, policymakers and citizens digested US President Donald Trump's sharp remarks and a surprise 25 per cent tariff rate earlier this week. While Indian government officials weighed a response and business groups tallied the cost of the trade barrier, the local social media flared up with users protesting Trump's comments and criticising Indian Prime Minister Narendra Modi for not speaking up. It started with Trump saying that India's trade barriers were the 'most strenuous and obnoxious', in a Truth Social post on Jul 30. He added the US may also impose a penalty for New Delhi's purchase of Russian weapons and energy. Less than a day later, he ripped into India again for aligning with Russia, calling them 'dead economies' in another post. With no imminent trade deal, the 25 per cent tariffs kicked in as at Friday. India is hardly alone in facing Trump's trade wrath, and not the subject to the very highest rates, but the news left business and political leaders wondering how to cope with the fallout. 'Blunt-force' message 'Overnight, the US-India trade equation shifted from tense to turbulent,' said Akshat Garg, assistant vice-president at Choice Wealth, a Mumbai-based financial services firm. The levies 'feel less like structured policy and more like a blunt-force political message'. Complicating the narrative around the India trade deal, or the lack of it, was the US pact with its traditional rival Pakistan that came through on the same day. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up As the US released rates across the world on Aug 1, India's relative disadvantage to competitor exporting countries became more apparent, dampening moods and stoking tempers further. 'The biggest blow is that Pakistan and Bangladesh got a better rate than us,' V Elangovan, managing director at SNQS Internationals, an apparel maker in the southern Indian manufacturing hub of Tirupur, told Bloomberg News. 'We were expecting something in the 15 to 20 per cent range.' India's annoyance can be traced back in part to Trump declaring himself the peacemaker that helped broker a ceasefire in the armed conflict between India and Pakistan in May. The move was seen as an effort to upstage Modi and put the two South Asian neighbours on an equal footing, despite India's larger military and economy. The events of this week have cemented that impression further in the eyes of some Indian observers. When the tariff rate news first dropped in late Wednesday evening in India, Ashish Kanodia recalls being 'very disturbed'. A director at Kanodia Global, a closely held exporter that gets over 40 per cent of its revenue from the US selling home fabrics to toys, the entrepreneur already has two of its largest US customers seeking discounts to make up for the levy. 'The next six months are going to be difficult for everyone,' Kanodia said, adding that profit margins will be squeezed. If the pain continues for 'months and months', he said that he will have to start cutting his workforce. The US is India's largest trading partner, with the two-way trade between them at an estimated US$129.2 billion in 2024. Compared with India's 25 per cent, Bangladesh was subjected to a 20 per cent tariff, Vietnam got a 20 per cent levy and Indonesia and Pakistan each received 19 per cent duties. 'We know that we have got a deal that is worse than other countries,' said Sabyasachi Ray, executive director at The Gem and Jewellery Export Promotion Council. 'We will take it up with the government.' Trump's actions mark a 180-degree turn for New Delhi's hopes of preferential treatment over regional peers. It was among the first to engage Washington in trade talks in February, confident of hammering out a deal sooner than others. Trump had called India's Prime Minister Narendra Modi 'my friend' in a Feb 14 post on X and the bond between the two countries 'special'. India is now weighing options to placate the White House, including boosting US imports, Bloomberg News reported, citing sources familiar with the matter, and many hope that the bilateral relationship and the tariff rate can still be improved. 'It is a storm in the India-US relationship at this moment, but I think there's a good chance that it will go away,' Vivek Mishra, deputy director of the Strategic Studies Programme at Delhi-based Observer Researcher Foundation, told Bloomberg News. Indian business and trade groups are supporting the government's stance on the deal as the negotiations for a US-India trade deal continue. Negotiating tactic Jewellery businesses 'are worried but they are not panicking' because they hope a more favourable deal can be worked out, said Ray of the gems export body. 'The negotiation that should be happening should be a win-win, not a win-lose.' The abrupt announcement by Trump over social media when negotiations with India were ongoing 'seems like a knee-jerk reaction', according to Rohit Kumar, founding partner at public policy research firm The Quantum Hub. 'This appears to be a negotiating tactic aimed at unresolved discussion points,' Kumar said. BLOOMBERG
Straits Times
2 hours ago
- Straits Times
Sheng Siong to open first store in Orchard by end August
Sign up now: Get ST's newsletters delivered to your inbox Renovation works for the store were first spotted in May. SINGAPORE - Supermarket operator Sheng Siong is set to open its first store in the Orchard Road area at The Cathay shopping mall. A spokesperson for the supermarket told The Straits Times that the 6,500 sq ft store is expected to open by the end of August. The spokesperson added: 'Sheng Siong previously operated a store in the Tekka area, and over the years, customers have expressed their hope for Sheng Siong to have a presence in the central area. 'The Cathay is surrounded by residential developments, and we believe it is a convenient spot for daily grocery needs.' Renovation works for the store were first spotted in May, when a Reddit user posted photos of the ongoing construction at Basement 1 of the mall. According to Sheng Siong's website, the supermarket currently has 82 outlets across the country, with the majority located in the North-east. The supermarket operator recorded a 6.1 per cent increase in net profit to $38.5 million for the first quarter ended March 31, from $36.3 million the year before. Top stories Swipe. Select. Stay informed. Singapore 60 years of building Singapore World Trump deploys nuclear submarines in row with Russia Singapore Man in army uniform allegedly vaping on bus released from SAF custody; investigations ongoing Asia 'Like me? Approach me directly, okay?': Inside a matchmaking event for China's wealthy Opinion America is tearing down another great public institution Life The story of you: What might Singapore look like for those born today? Opinion Quiet zones in public spaces can help people recharge in the city Revenue grew 7.1 per cent to $403 million, from $376.2 million in the corresponding period in 2024. This was thanks to contributions from eight new stores opening in the quarter and FY2024, as well as higher festive sales during Hari Raya in March, said the company on April 29.
