Asian stocks retreat from recent peaks as US tariff deadline looms
An MSCI gauge of equities in emerging Asia slid nearly 1 per cent from a 3-1/2-year high notched in the previous session. Stocks in South Korea and Taiwan, which together make up over a third of the regional index, were the biggest drags on performance.
Investors initially cheered trade discussions between the United States and Vietnam, hoping they could pave the way for breakthroughs in other emerging economies. But limited details and tariffs remaining above pre-April 2 levels dampened the optimism.
"The trade deal with Vietnam announced this week was more hawkish than we expected, posing a risk that other countries could face higher tariff rates," Nomura analysts said in a note. South Korea's KOSPI fell 1.5 per cent after scaling a near four-year high in the previous session, marking its worst intraday drop since April 9.
Taiwan's benchmark index slipped from a near four-month high. Stocks in the Philippines fell 0.7 per cent, while those in Singapore eased off from a record-closing high. Thai stocks also came off a three-week peak, snapping a four-session rally.
Vietnam's benchmark index slipped from its April 2022 peak, while the dong weakened to a record low of 26,230 against the US dollar.
Currencies in emerging Asia also nudged lower - Malaysia's ringgit slipped to an eight-session low, while the Indonesian rupiah and the Philippine peso shed around 0.2 per cent each.
An index tracking global emerging market currencies retreated from a record high. "Asian currencies may face renewed volatility as markets turn their attention to tariff-related developments," said Lloyd Chan, senior currency analyst at MUFG.
Citi analysts, referring to the US-Vietnam trade development, said that while the "de-dollarisation" narrative remained well-entrenched and had more steam to run further, "the roadblocks for stronger EM Asia FX had just increased".
They predicted similar deals could impact currencies such as the Chinese yuan, ringgit, Thai baht, South Korea's won, and the Singapore dollar.
On the day, the Singaporean dollar snapped a three-day losing streak to appreciate marginally, and remained a few points shy of its October 2014 high.
The Thai baht and the Indian rupee weakened marginally. The US dollar index, which measures the greenback against a basket of major currencies, retraced some of its gains from Thursday.
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The Star
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- The Star
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