Southeast Asian stocks, currencies gain in first reaction to China-US trade deal
KUALA LUMPUR: Southeast Asian equity markets gained on Tuesday, while regional currencies benefited from a faltering US dollar, in their first reaction to the US-China trade deal, although there was the overhang of caution that weighed on Asian markets broadly.
The financial markets in Thailand, Malaysia, Indonesia, the Philippines and Singapore were closed for the Vesak Day holiday on Monday, when global markets rallied after the United States and China struck a deal over the weekend to temporarily slash reciprocal tariffs.
Malaysian shares surged 2.1 per cent to their highest since March 3 on resuming trade on Tuesday, while Philippine stocks advanced 1.6 per cent to levels unseen since January 8. Thai stocks rose 0.8 per cent, and Singapore's benchmark was up 0.5 per cent. A number of Southeast Asian countries are economically reliant on China.
Taiwan's benchmark mirrored the 1 per cent gain from the previous session, though South Korean stocks were flat, taking a breather after a more-than-1 per cent jump on Monday.
The rally in the broader Asian stock markets also ran out of steam as resurgent worries about US President Donald Trump's trade policies and their impact on the global economy kept risk sentiment in check.
The evolving trade policies remain a significant economic risk factor, potentially driving both inflation and growth constraints for the US even at the lower tariff levels, said Saktiandi Supaat, Maybank's chief FX strategist.
That also weighed on the dollar index, whose rally on Monday had flipped to a 0.2 per cent dip by Tuesday afternoon in Asia. That, though, lifted Southeast Asian currencies.
The Thai baht advanced as much as 1 per cent to 33.135 per US dollar, while the Indian rupee added 0.4 per cent, and the Philippine peso and Singapore dollar gained 0.2 per cent each. The Malaysian ringgit bucked the trend to drop 0.5 per cent, declining for the sixth straight session.
It has weakened since the country's central bank held interest rates steady on Thursday and flagged risks of slower economic growth. Indian stocks fell over 1 per cent while Pakistan's benchmark surrendered most gains to edge up 0.2 per cent.
Both markets had surged on Monday after India and Pakistan reached a ceasefire over the weekend after days of military conflict. India is due to release inflation data later in the day. However, the focus will be on the US inflation report hours later, with analysts expecting tariff-driven price increases in certain goods.
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