logo
Stocks slip in Asia on US tariff confusion, oil skids

Stocks slip in Asia on US tariff confusion, oil skids

CNA14 hours ago
SYDNEY: Stock markets slipped in Asia on Monday (Jul 7) amid confusion as United States officials flagged a delay on tariffs but failed to provide much detail on the change, while oil prices slid as OPEC+ opened the supply spigots more than expected.
The US is close to finalising several trade agreements in the coming days and will notify other countries of higher tariff rates by Jul 9, President Donald Trump said on Sunday, with the higher rates to take effect on Aug 1.
"President Trump's going to be sending letters to some of our trading partners saying that if you don't move things along, then on Aug 1, you will boomerang back to your Apr 2 tariff level," US Treasury Secretary Scott Bessent told CNN.
Trump in April announced a 10 per cent base tariff rate on most countries and higher "reciprocal" rates ranging up to 50 per cent, with an original deadline of this Wednesday.
However, Trump also said levies could range in value from "maybe 60 per cent or 70 per cent", and threatened an extra 10 per cent on countries aligning themselves with the "Anti-American policies" of the BRICS group of Brazil, Russia, India and China.
With very few actual trade deals done, analysts had always suspected the date would be pushed out, though it was still not clear if the new deadline applied to all trading partners or just some.
"This renewed escalation in trade tensions comes at a time when major trade partners, including the European Union, India and Japan, are believed to be at crucial stages of bilateral negotiations," analysts at ANZ said in a note.
"If reciprocal tariffs are implemented in their original form or even expanded, we believe it will intensify downside risks to US growth and increase upside risks to inflation."
Investors have grown somewhat used to the uncertainty surrounding US trade policy, and the initial market reaction was cautious. S&P 500 futures and Nasdaq futures both eased 0.3 per cent.
EUROSTOXX 50 futures eased 0.1 per cent, while FTSE futures fell 0.2 per cent and DAX futures held steady.
Japan's Nikkei lost 0.5 per cent, while South Korean stocks went flat. MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.6 per cent, as Chinese blue chips dropped 0.5 per cent.
DOLLAR MIXED
Safe-haven bonds were better bid, with 10-year Treasury yields down almost 2 basis points at 4.326 per cent.
Major currencies were mixed as the dollar index nudged up to 97.071. The euro held at US$1.1771, just off last week's top of US$1.1830, while the dollar was a fraction firmer at ¥144.76.
The dollar has been undermined by investor concerns about Trump's often chaotic tariff policy and what that might do to economic growth and inflation.
The same worries have kept the Federal Reserve from cutting rates, and minutes of its last meeting should offer more colour on when the majority of members might resume easing.
It is a relatively quiet week for Fed speakers with only two district presidents on the docket, while economic data is also sparse.
The Reserve Bank of Australia is widely expected to cut its rates by a quarter point to 3.60 per cent at a meeting on Tuesday, the third easing this cycle, and markets imply an eventual destination for rates of 2.85 per cent or 3.10 per cent.
New Zealand's central bank meets on Wednesday and is likely to hold rates at 3.25 per cent, having already slashed by 225 basis points over the past year.
In commodity markets, gold slipped 0.3 per cent to US$3,324 an ounce, though it did gain almost 2 per cent last week as the dollar fell.
Oil prices slid anew after the Organization of the Petroleum Exporting Countries (OPEC) and their allies, a group known as OPEC+, agreed on Saturday to raise production by a larger-than-expected 548,000 barrels per day in August.
The group also warned that it could hike by a similar amount in September, leaving analysts with the impression it was trying to squeeze lower margin producers and particularly those pulling oil from US shale.
"We see OPEC+ targeting Brent oil futures around US$60 to US$65 per barrel as a result," said Vivek Dhar, an analyst at CBA.
"This would challenge the economics of US shale oil supply growth and prevent non-OPEC+ supply growth from taking market share in coming years."
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Trump to Brazil: 'Leave Bolsonaro alone'
Trump to Brazil: 'Leave Bolsonaro alone'

Straits Times

timean hour ago

  • Straits Times

Trump to Brazil: 'Leave Bolsonaro alone'

Sign up now: Get ST's newsletters delivered to your inbox FILE PHOTO: Former Brazilian President Jair Bolsonaro looks on during \"Power of The People\" event hosted by Turning Point USA at Trump National Doral Miami Resort in Doral, Florida, U.S., February 3, 2023. REUTERS/Marco Bello/File Photo WASHINGTON/SAO PAULO - U.S. President Donald Trump defended former Brazilian President Jair Bolsonaro on Monday in a social media post that said his former ally was the victim of a "witch hunt," a term Trump has used to describe his own treatment by political opponents. Bolsonaro, who was friendly with Trump when they were both in office, is on trial in Brazil on charges of plotting a coup to stop Luiz Inacio Lula da Silva from taking office in January 2023. "The only Trial that should be happening is a Trial by the Voters of Brazil — It's called an Election. LEAVE BOLSONARO ALONE!" Trump wrote on social media. Lula responded on X, saying Brazil is a sovereign country that "won't accept interference or instruction from anyone." "No one is above the law. Especially those that threaten freedom and the rule of law," Lula added. Their exchange came as Lula hosted the BRICS summit of developing nations in Rio de Janeiro, which Trump accused on Sunday of advancing "anti-American policies" and threatened with more tariffs, drawing pushback from members and partner nations. Bolsonaro said in a statement to Reuters that he was pleased with Trump's support, and again labeled the case against him "political persecution." Top stories Swipe. Select. Stay informed. Singapore Eligible S'poreans to get up to $850 in GSTV cash, up to $450 in MediSave top-ups in August Singapore Four golf courses to close by 2035, leaving Singapore with 12 courses Singapore Singapore's second mufti Sheikh Syed Isa Semait dies at age 87 Singapore Fewer marriages in Singapore in 2024; greater marital stability for recent unions Singapore Competition watchdog gives SIA, Malaysia Airlines conditional approval to continue cooperation Singapore About 20 delivery riders meet Pritam Singh to discuss platform worker issues Business OCBC sets loan target of $5b and covers more territories in boost for serial entrepreneurs Singapore Reform Party to leave opposition group People's Alliance for Reform; two parties remain Brazil's Supreme Court agreed in March to hear the case against Bolsonaro and seven other people, including several military officers, who were charged with plotting a coup to stop leftist Lula from taking office. Last month, Bolsonaro denied that he led an attempt to overthrow the government after losing the 2022 election in his testimony before the Supreme Court, but acknowledged taking part in meetings aimed at reversing the outcome. Bolsonaro said he and senior aides discussed alternatives to accepting the electoral results, including the possibility of deploying military forces and suspending some civil liberties, but he said those proposals were soon dropped. Police spent two years investigating the election-denying movement that culminated in riots by Bolsonaro supporters in the capital in early 2023, a week after Lula took office. REUTERS

Trump to levy 25% tariffs on Japan, South Korea in letters to leaders
Trump to levy 25% tariffs on Japan, South Korea in letters to leaders

Straits Times

timean hour ago

  • Straits Times

Trump to levy 25% tariffs on Japan, South Korea in letters to leaders

Sign up now: Get ST's newsletters delivered to your inbox US President Donald Trump announcing steeper levies on trading partners at the White House on April 2. WASHINGTON – President Donald Trump announced tariffs of 25 per cent on goods from Japan and South Korea beginning on Aug 1, as he moved to impose unilateral rates on countries that have not yet secured trade deals with his administration. The two Asian nations were the first announcements in what the president promised would be a flurry of demand letters and trade deals announced on July 7. Mr Trump's second-term rush to overhaul US trade policies has served as a steady source of uncertainty for markets, central bankers and executives trying to game out the effect on production, inventories, hiring, inflation and consumer demand – routine planning that's hard enough without costs like tariffs that are on one day, off the next. In the end, Japan and South Korea's rates, shared on his Truth Social platform, are largely in line with what he had already announced the two nations were likely to face. After a 90-day reprieve from his so-called reciprocal tariffs, which initially hit Japan with a 24 per cent rate and South Korea with a 25 per cent levy, Mr Trump lowered those duties to 10 per cent to allow time for negotiations. Mr Trump warned the nations against retaliation in his letters, saying any actions would be met with a response from the US. 'If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by will be added onto the 25% that we charge,' Mr Trump said. Mr Trump also said that the 25 per cent rates did not include any sectoral-specific tariffs that the administration had or would seperately implement on goods imported in key industries. White House officials did not say whether additional demand letters would be released on July 7, or if the president still planned to announce trade deals with other nations. Treasury Secretary Scott Bessent said earlier in an interview with CNBC that he expected to 'have several announcements in the next 48 hours.' Mr Trump's levies will help fill the Treasury's coffers at a time when investors are worried about the nation's mounting debt, particularly after Congress passed much of the president's economic agenda in a US$3.4 trillion (S$4.3 trillion) tax cut and spending package last week. While US stocks reached record highs on July 4, the dollar has slumped and longer-term borrowing costs remain elevated. Japan and Korea were the US's fifth- and seventh-largest sources of US imports of last year – accounting for almost 9 per cent of the total. In fact, the burden of tariffs falls to American importers, which must contend with tighter profit margins, weigh raising prices on consumers or seek discounts from their foreign suppliers. 'All of that new revenue is just a tax on US businesses,' Mr Jonathan Gold, vice-president of supply chain and customs policy at the National Retail Federation, wrote in a LinkedIn post on July 4. 'Global uncertainty continues to prevail at record-high levels,' Allianz Research economists wrote last week in a report that sees world economic growth growing this year by 2.5 per cent – the weakest since 2008 excluding recessions. 'This will lead to a synchronised decline in the economic cycle in both developed and emerging markets.' On April 2, Mr Trump held a Rose Garden ceremony announcing steeper levies on more than 50 trading partners ranging as high as 50 per cent – a shock to the economic outlook that sent financial markets into a tailspin and sparked fears of a recession. A week later, he suspended those peak rates. The negotiating tracks have been different for the US's three largest trading partners – Mexico, Canada and China. Beijing and Washington have negotiated truces that lowered tariffs on Chinese products that soared to 145 per cent and eased export controls on key supplies. As partners in the US-Mexico-Canada Agreement, the two US neighbours aren't subject to the reciprocal tariffs and instead are trying to negotiate lower rates on sectoral levies. Bloomberg Economics' US trade uncertainty index has come off its April peak, but it still higher than it was when Mr Trump was elected in November. On top of market jitters and economic headwinds, legal challenges offer a potential check on the reciprocal tariffs, which Mr Trump declared under executive authority known as the International Emergency Economic Powers Act, or IEEPA. The US Court of International Trade ruled on May 28 that the vast majority of Trump's levies were issued illegally under IEEPA and ordered them blocked. A day later, an appeals court gave the Trump administration a temporary reprieve from the ruling and decided that the tariffs can remain in place until it hears the case, scheduling the arguments for July 31. Yet the Trump administration is using another presidential power to impose tariffs – Section 232 of the Trade Expansion Act – on specific sectors so far including autos, steel and aluminium. Other 232 sectoral cases are in the works, potentially allowing Mr Trump to cover a wide range of US imported raw materials as well as finished consumer goods should the IEEPA levies get struck down by the courts. Mr Trump made clear those tariffs could stack, describing the latest levies as 'separate from all Sectoral Tariffs.' Another friction point for Trump on tariffs is the Federal Reserve. Jerome Powell, the chair of the US central bank, has held off on lowering rates this year – despite intense pressure and name-calling from Mr Trump – in part to determine whether tariff-driven price hikes might evolve into more persistent cost-of-living pressures. Bloomberg Economics estimates that if all reciprocal tariffs are raised to their threatened level on July 9, average duties on all US imports could climb to around 20 per cent from less than 3 per cent before Mr Trump's inauguration in January. That would add to growth and inflation risks for the US economy. Between higher tariffs, oil prices and immigration restrictions in the US, 'the bottom line is that we should see inflation move higher over the coming months,' Mr Torsten Slok, chief economist with Apollo Global Management, wrote in a note on July 6. BLOOMBERG

Trump says will impose 25% tariffs on Japan, South Korea from Aug 1
Trump says will impose 25% tariffs on Japan, South Korea from Aug 1

CNA

time2 hours ago

  • CNA

Trump says will impose 25% tariffs on Japan, South Korea from Aug 1

WASHINGTON: US President Donald Trump said on Monday (Jul 7) he would impose a 25 per cent tariff on goods from Japan and South Korea starting on Aug 1, posting letters to the leaders of those countries on his social media platform. In his first letters to trading partners ahead of a deadline to reach a deal, Trump penned near-identically worded letters to the leaders of Japan and South Korea. Trump said the tariffs would apply from Aug 1 because their trading relationships with Washington were "unfortunately, far from reciprocal".

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store