China stimulus lifts Asian stocks as trade war fears cap currency gains
Asian stocks jumped on Monday on Beijing's fresh stimulus measures aimed at boosting consumer spending, while regional currencies traded cautiously as investors weighed mounting trade frictions that threaten global economic growth. Seoul's benchmark climbed 1.6% to their highest since February 27, while stocks in Kuala Lumpur gained 1.1% in its third consecutive winning session.
Shares in Taipei added 0.7% after advancing as much as 1.5% earlier in the session. On Sunday, China unveiled sweeping measures to boost domestic consumption, including income hikes and childcare subsidies, just days after financial regulators urged an easing of credit restrictions - moves analysts say could revitalise Southeast Asia's biggest trading partner.
The positive sentiment helped offset concerns about widening trade disputes after US President Donald Trump threatened 200% tariffs on European beverages imports last week.
Malaysian shares, which confirmed a correction last week, found support from the China news. Indonesia's benchmark, however, dropped 1%.
The index is now down 18.4% from its September 19 peak, not far from the 20% mark which would confirm bear territory. Stock market corrections are fairly common, with the S&P 500 logging 56 such pullbacks since 1929, and typically cause limited damage unless they deteriorate into more severe bear markets. 'We remain cautious about emerging market equities, as we expect larger and more pervasive tariff actions from the US on 2 April,' MUFG Bank's senior currency analyst Lloyd Chan said.
US Commerce Secretary Howard Lutnick's recent confirmation of imminent additional tariff actions suggests the current Asian market rally may be short-lived, Chan said. Among regional currencies, the South Korean won advanced 0.4%, while the Indonesia rupiah slipped 0.2%. Thai baht, Singapore dollar and Malaysian ringgit were flat.
Gold prices were steady on Monday, sitting just below the $3,000 mark that was finally broken last week, with the focus on trade tariffs and the US Federal Reserve's policy meeting.
Spot gold edged up 0.1% to $2,987.13 an ounce by 09:29 p.m. ET (1329 GMT), having hit a record high of $3,004.86 on Friday.
U.S. gold futures eased 0.2% to $2,994.70.
The Federal Reserve will give its new economic projections this week, which will provide the most tangible evidence yet of how U.S. central bankers view the likely impact of President Donald Trump's policies that have clouded a previously solid economic outlook.
There are 'no guarantees' there will not be a recession in the United States, although there could be an adjustment, Treasury Secretary Scott Bessent said on Sunday.
'I expect some consolidation in gold prices...Right now, the market is in a 'wait-and-see' mode ahead of the Fed's decision,' said David Meger, director of metals trading at High Ridge Futures.
Markets expect the U.S. central bank to hold interest rates on Wednesday, with the next cut in June.
Zero-yield bullion is considered a hedge against uncertainty and tends to thrive in a low-interest environment.
Data showed U.S. retail sales rebounded by less than expected in February, signalling moderate economic growth despite import tariffs and federal worker layoffs dampening sentiment.
'Should economic data continue to soften and the global tariff war escalate, gold will continue to benefit,' analysts at Heraeus Metals said in a note.
Trump, meanwhile, said he plans to speak to Russian President Vladimir Putin on Tuesday and discuss ending the war in Ukraine.
Spot silver fell 1.01% to $33.44 an ounce and palladium was down 0.38% to $961.50, while platinum added 0.3% to $996.45.
The dollar index held steady near five-month lows, having shed nearly 6% since January's two-year peak as initial Trump-related growth optimism gave way to recession fears. Focus is now on policy decisions from the US Federal Reserve and Bank Indonesia on Wednesday, followed by Taiwan's central bank on Thursday, with all three expected to stand pat on rates. Analysts at Barclays expect the Fed to cut rates twice this year amid tariff-induced growth concerns, potentially giving Asian central banks more room to ease monetary policy despite inflation pressures.
Indonesia reported a 14% rise in February exports, a positive development for its economy, but with the rupiah down about 2% this year despite regular intervention, the central bank is likely to maintain its focus on currency stability. * Bank Indonesia to hold rates steady on March 19, cut in Q2, supported by the latest economic stimulus plan from top metals consumer China and a weaker dollar, with traders awaiting more clarity on US tariff risks and their effect on global growth.
Benchmark three-month copper on the London Metals Exchange added 0.4% to $9,817 a metric tone in official open-outcry trading, having touched $9,850 on Friday for its highest since October 9.
China released fresh data on Monday after the previous day's announcement of a 'special action plan' to boost domestic consumption.
'The latest data showed Chinese consumption, investment and industrial production exceeded estimates for January-February,' said ING commodities analyst Ewa Manthey.
'Still, the property sector, a pillar for metals demand, is yet to bottom out. China's new home prices and existing home prices continued to slide month on month.' In the broader picture for growth-dependent metals, US import tariffs and escalating global trade wars remained the main longer-term downside risk for the sector.
US President Donald Trump said he has no intention of creating exemptions on steel and aluminium tariffs and that reciprocal and sectoral tariffs will be imposed on April 2.
Trump previously ordered an investigation into possible new tariffs on copper, inflating the premium between the most active US Comex copper futures and the LME contract.
The dollar hovered near a five-month low on Monday. US retail sales rebounded in February, suggesting that the economy continued to grow in the first quarter, though at a moderate pace. The focus is now on Wednesday's US Federal Reserve meeting, at which the central bank is expected to hold interest rates steady.
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