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Business Upturn
3 days ago
- Business
- Business Upturn
Global markets rally as U.S. court blocks Trump-era tariffs; AI earnings also boost sentiment
Global equity markets opened higher on Thursday, buoyed by sharp gains in U.S. futures after a landmark federal court ruling blocked former President Donald Trump's authority to impose trade tariffs. The move was viewed as a significant de-escalation of trade-related risks, further supported by strong quarterly results from artificial intelligence major Nvidia. A U.S. federal court ruled that Donald Trump did not have the authority to set tariffs unilaterally, effectively blocking the so-called 'Liberation Day' tariffs introduced during his presidency. The Trump administration has already appealed the decision. The White House issued a sharp response, stating, 'It's not for unelected judges to decide how to properly address a national emergency.' This legal development was interpreted by markets as a rollback of protectionist trade policies, leading to a relief rally in equities. U.S. stock index futures surged in response: Dow Futures jumped 500 points (+1.19%) to 42,599 Nasdaq Futures gained 400 points (+1.88%) to 21,718 Russell 2000 Futures rose 41 points (+1.98%) to 2,109 The positive momentum spilled over into global markets: Germany's DAX Futures were up 190 points (+0.79%) UK's FTSE Futures added 62 points (+0.70%) Japan's Nikkei Index gained 529 points (+1.40%) to 38,252 South Korea's KOSPI rose 30 points (+1.14%) Taiwan's Taiex Futures climbed 141 points (+0.67%) India's GIFT Nifty was up 57 points (+0.23%) at 24,820 (adjusted). However, Hang Seng Futures in Hong Kong edged slightly lower by 24 points (-0.10%). This rebound comes after a slightly negative close on Wall Street on the previous day: Dow Jones closed at 42,099, down 245 points (-0.58%) Nasdaq ended at 19,101, lower by 98 points (-0.51%) Analysts noted that the combination of strong AI earnings and legal checks on unilateral tariff powers has infused fresh optimism across equity markets globally. News desk at
Business Recorder
21-05-2025
- Business
- Business Recorder
Japan's economic journey: lessons from rise and stagnation
Japan's economic story is a rollercoaster of triumph and cautionary tales. From the ashes of World War II to global dominance in the 1980s, and then a prolonged stagnation, Japan's trajectory offers valuable lessons for nations and policymakers. By diving into its rise, fall, and potential paths forward, we can uncover insights about resilience, adaptability, and the perils of complacency. The post-war miracle: rebuilding from ruins After World War II, Japan was a shattered nation. By 1946, industrial output had plummeted to 27.6 percent of pre-war levels, and nearly 40 percent of its infrastructure was destroyed. Famine loomed, but US food aid in 1946 prevented widespread starvation. Between 1945 and 1952, the US injected roughly dollar 2.2 billion (adjusted for inflation) in aid, distinct from Europe's Marshall Plan, to stabilize Japan's economy. This lifeline rebuilt key sectors like steel and textiles. Under the US-led Supreme Command for Allied Powers (SCAP), Japan accessed cutting-edge technologies from the US and beyond. The Ministry of International Trade and Industry (MITI) played a pivotal role, securing low-cost technology imports that modernized industries. This foundation propelled Japan toward dominance in electronics, automotive, and robotics. Lesson: External support and strategic institutions can kick-start recovery, but leveraging global knowledge is key to sustained growth. Export-led growth: riding the global wave The Korean War (1950–1953) was a turning point. US military procurement, peaking at 7 percent of Japan's GNP in 1953, fuelled industries like steel and automotive. Toyota, for instance, scaled up through military contracts. By 1960, industrial output soared to 350 percent of pre-war levels. From 1957 to 1973, Japan's GNP grew at a staggering 10 percent annually, with GDP rising from dollar 91 billion in 1965 to dollar 1.1 trillion by 1980 (in nominal terms). Japan became an export juggernaut, flooding US markets with cars, electronics, and machinery. Even the 1973 and 1979 oil shocks couldn't derail it. MITI's subsidies bolstered high-tech sectors, with firms like NEC and Toshiba leading in semiconductors. Growth slowed to 5 percent annually in the 1970s, still outpacing the US. Lesson: Aligning industrial policy with global demand can drive explosive growth, but resilience requires adapting to external shocks. The bubble and bust: when euphoria backfires By the 1980s, Japan was on top of the world. Low interest rates and speculative fervour fuelled a bubble, with the Nikkei Index hitting 38,957 in 1989. Real estate prices skyrocketed—Tokyo's land was briefly worth more than all US real estate combined. But the bubble was unsustainable. In 1990, the Bank of Japan raised interest rates, and by 1992, the Nikkei crashed to 14,000. The 'Lost Decade' (1991–2003) followed, marked by deflation, a credit crunch, and GDP growth averaging just 1.14 percent. Banks, burdened with non-performing loans, couldn't lend. Businesses stagnated, and consumer confidence tanked. Japan's failure to swiftly recapitalize banks or clear bad debt prolonged the crisis. Lesson: Unchecked speculation and delayed reforms can turn prosperity into paralysis. Proactive regulation is critical. China's rise: a new global order While Japan faltered, China surged. Deng Xiaoping's reforms in the 1980s transformed China into a market-driven export giant. By 2001, its WTO accession solidified its global trade dominance. China's low labour costs undercut Japan's exports. By 1999, China surpassed Japan as Asia's largest economy by purchasing power parity, and in 2010, it became the world's second-largest economy. Japanese giants like Sony and Panasonic lost market share to Chinese competitors. Japan's strong yen and high labour costs didn't help. By 2024, Japan's GDP was an estimated dollar 4.2 trillion, down from dollar 5.7 trillion in 2010, while China's neared dollar 18 trillion (in PPP terns around 40 trillion dollars). Lesson: Global competition waits for no one. Staying cost-competitive and innovative is non-negotiable. Structural woes: ageing, debt, and inertia Japan's stagnation wasn't just external. An ageing population—36 percent of citizens were over 65 by 2024—shrank the workforce. The fertility rate, at 1.26 births per woman, couldn't sustain growth. Public debt ballooned to dollar 8.84 trillion (263 percent of GDP), among the highest globally. Innovation lagged, with Japan trailing in AI and digital tech investments. In 2023, Japan's R&D spending was 3.3 percent of GDP, solid but behind South Korea's 4.9 percent. Regulatory inertia compounded the problem. Slow bank recapitalization and resistance to structural reforms deepened the malaise. Japan also shunned immigration, with foreigners making up just 2.3 percent of the population in 2024, compared to 14 percent in the US. Lesson: Demographic decline and rigid systems can choke progress. Flexibility and openness are vital. Missed opportunities: what Japan could have done? Japan's stagnation wasn't inevitable. In the 1980s, macroprudential policies—like stricter lending rules—could have tamed the bubble. After the 1991 crash, rapid bank recapitalization and debt restructuring might have restored confidence, as seen in Sweden's 1990s recovery. Embracing skilled immigration in tech and engineering could have offset demographic decline, boosting R&D in fields like AI and robotics. Globally, Japan could have invested in emerging markets like Africa and Southeast Asia, securing trade routes and lowering costs. Instead, its focus remained inward. Lesson: Timely intervention and global engagement can prevent prolonged decline. The US-Japan-China triangle: a global perspective The US was Japan's catalyst. Post-war aid, open markets, and tech transfers fuelled Japan's miracle. But China's rise disrupted this dynamic. While the US benefited from cheap Chinese imports, it lost 5 million manufacturing jobs between 2000 and 2015. Japan, caught between China's cost advantage and US market flexibility, struggled to adapt. Lesson: Global alliances and markets drive growth, but adaptability is key when new players emerge. The way forward: revitalizing Japan Japan's story isn't over. To reclaim relevance, it must act boldly: Embrace immigration: Welcoming skilled workers in tech, finance, and biotech could rejuvenate the workforce. Singapore's 40 percent foreign workforce shows how this can work. Invest globally: Partnering with developing nations in Asia and Africa for manufacturing and resources could cut costs and build trade networks. Lead in innovation: Doubling down on generative AI, green tech, and robotics—where Japan still has expertise—could restore its edge. In 2023, Japan led in industrial robot exports, a strength to build on. Form strategic alliances: Collaborating with nations like India and Vietnam could counterbalance China's dominance. Lessons for Pakistan from Japan's rise and stagnation Japan's economic rise from post-war ruin to global industrial power offers Pakistan a compelling blueprint for smart integration into the global economy. Japan's targeted policies, such as tech-focused imports and export-led growth, were catalysed by strong institutions like MITI and global partnerships, especially with the US. Pakistan, too, can exploit its geopolitical significance through projects like CPEC, but the key is to pivot from infrastructure-heavy deals to tech transfer and workforce empowerment. The real game-changer would be embedding itself in emerging global value chains—particularly in digital services, green energy, and AI. However, Pakistan's potential will remain untapped unless it turns its so-called 'demographic dividend' into a development powerhouse. Japan's tech dominance rested on massive investments in education and R&D, while Pakistan lags with underfunded, outdated systems. With over 60 percent of its population under 30, Pakistan must revolutionize learning—investing heavily in STEM through latest tools and technologies, investing in human intelligence through massive and universal digitalization, and high-tech skills. Programmes modelled on successful initiatives in China, South Korea, and other innovation-driven nations could empower Pakistan's youth to become drivers of technological advancement. Equally important is regulatory reform and the creation of a robust ecosystem that nurtures startups and strengthens digital infrastructure. If Pakistan aspires to compete in the high-tech global economy—beyond traditional sectors like textiles and remittances—it must prioritize innovation, entrepreneurship, and tech-enabled industries. At the same time, Pakistan must absorb the critical lesson from Japan's economic stagnation: adapt swiftly or risk being left behind. Unlike Japan, which struggled to adjust to China's rapid ascent, Pakistan stands at a unique crossroads—with the chance to collaborate with China's booming tech sector. Leveraging opportunities within China's dollar 1.5 trillion digital economy—through CPEC-linked ventures and broader technological cooperation—could deliver transformative dividends. However, alliances alone won't suffice. Pakistan must launch a bold 'Sci-Tech-Human Power Complex' revolution that integrates universal high-tech education, quality healthcare, and full inclusion of women in the workforce. Empowering the entire population, not just a select few, is the only way to unlock sustained growth. By embracing innovation, remaining agile, and staying open to global trends, Pakistan can build a future that avoids the pitfalls of stagnation and fully realizes its immense potential. Copyright Business Recorder, 2025
West Australian
13-05-2025
- Business
- West Australian
ASX: Share market lifts on US-China peace talks but gold stocks sink
A ceasefire in America's trade war with China has sparked an enthusiastic Tuesday morning for share markets. The ASX200 lifted 0.75 per cent in the first few minutes of trade but the ebullience was soon pared back, and the bourse was up 0.38 per cent at 8,264.7 points an hour from the close. Japan's Nikkei Index was up 1.8 per cent while the Dow gained 2.8 per cent overnight. It followed news of a peace deal between the world's two largest economies on Monday, with tariffs slashed for 90-days while trade talks continue. But economists have cautioned that tariffs remain much higher than when the year started. US-exposed Clarity Pharmaceuticals was the top performer, rising 15 per cent to $2.56 per share. Clarity won a fast-track designation from America's Food and Drug Administration in February for a prostate cancer treatment. That came despite overseas drug-makers sliding thanks to news President Donald Trump planned an executive order to slash pharmaceutical prices. Life360 — a tech app hoping to grow in North America — was up 11.9 per cent to $26.69. But WA's darling gold industry copped a hit as investors downgraded their expectations of economic and financial risk. The Aussie dollar gold price dove $180 an ounce in the past week to be below $5100/oz. The five worst performing stocks on Tuesday were all gold plays. Capricorn Metals, Ramelius Resources, Genesis Minerals, Spartan Resources and Regis Resources all posted falls of almost 10 per cent or more. Commonwealth Bank economists declared they believe 'peak tariff' is past — with the US to cut trade taxes on Chinese goods by 115 percentage points. 'The 90 day deal gives the US and Chinese governments time to rethink their positions,' head of international and sustainable economics Joseph Capurso said in a note. 'Their earlier positions were going to have a material negative impact on their economies.' He said the deal reduced economic risk but tariffs could still lead to stagflation — when both unemployment and inflation remain elevated. 'We consider there is little chance the US and Chinese governments will agree to a comprehensive trade agreement in the next 90 days,' Mr Caruso said. 'The shortlived first trade agreement in President Trump' first term took around one year to negotiate. 'At the end of the 90 days, we expect tariffs on imports from China and the US will still be material, probably not much lower than currently.' ANZ reckoned the US Federal Reserve would resume interest rate cuts in the September quarter. But the big four bank still put the chances of an American recession at 30 per cent. The ceasefire deal is the latest major backdown by Mr Trump's administration, after sweeping and largely baseless tariffs announced on so-called 'Liberation Day' in April. The huge tax hike — among the largest in US history — sparked panic in financial markets and sent the cost of US government debt soaring.
Straits Times
13-05-2025
- Business
- Straits Times
Singapore stock market rises in cautious Asia relief rally after US-China tariff reprieve
In Singapore, the Straits Times Index (STI) jumped 1.89 per cent, or 73 points, to 3,949.29 when the market opened. ST PHOTO: LIM YAOHUI SINGAPORE - Stock markets in Asia on May 13 rose in a cautious relief rally on hopes a 90-day tariff truce will lead to the end of an all-out trade war between the United States and China. In Singapore, the Straits Times Index (STI) jumped 1.89 per cent, or 73 points, to 3,949.29 when the market opened. It pared two-thirds of its gains and was up 0.6 per cent, or 22 points, at 3,897.84 as at 10.44am. Most Asian markets joined with Japan's Nikkei Index index rising 1.7 per cent, South Korea's Kospi advancing 0.4 per cent and Australia's ASX200 up 0.7 per cent. The Hang Seng Index, which has jumped the previous day, fell 1.3 per cent, while the Shanghai Composite Index edged up 0.2 per cent. Overnight on Wall Street, the blue-chip Dow Jones Industrial Average rallied 1,160 points or 2.8 per cent, while the broader S&P 500 surged 3.3 per cent and the tech-heavy Nasdaq 100 Index soared 4.35 per cent back into a bull market. The US dollar meanwhile jumped over 1 per cent for its best one-day move since Nov 6, in the immediate aftermath of Donald Trump's victory in the US presidential election. Under the surprise deal, which will last for 90 days, US exports to China will see tariffs reduced to 10 per cent from 125 per cent. Meanwhile, tariffs on Chinese exports to the US will be lowered t o 30 per cent from 145 per cent. Morningstar Equity Research analysts Kai Wang and Kathy Chan said the tariff reductions were greater than expected, and should benefit certain sectors. 'We do think a recovery should be imminent based on the progress made. Certain sectors should see higher appreciation during the market upswing, with the technology, communication services, and consumer cyclical sectors benefiting the most during the recovery period,' they said. However, they also cautioned that although the worst may be over, 'the road to full recovery may still be bumpy, as US President Donald Trump has a history of changing course and making maximalist proposals,' they added. JP Morgan Asset Management chief market strategist for the Asia Pacific Tai Hui said the immediate market reaction has been positive, noting that Hong Kong stock indices and US equities futures both rose. 'Overall, we expect the market to get back on to a risk-on sentiment in the near term. Pressure on the Fed to cut rates may also ease for the time being,' he said. OCBC bank chief economist Selena Ling added that the deal 'buys some time' where the tariffs are brought back from 'sky-high levels to more manageable levels', leading to market relief. 'However the caveat is that it is not a permanent agreement. As such, there are still inherent uncertainties,' she said. She also pointed out that there are no specific purchasing commitments unlike in the 2020 trade deal that Mr Trump signed with Beijing that required China to increase purchases of US exports by US$200 billion (S$261 billion) over two years. 'There is a permanent dialogue channel but no dispute resolution panel; and the sectoral tariffs (for semiconductors and pharmaceuticals, for instance) are still pending,' Ms Ling added. 'So it is a positive start to de-escalation but still a long road ahead for negotiations,' she said. Bank of Singapore chief investment strategist Eli Lee added that the US-China trade de-escalation is deeper and faster than widely expected, and will serve as a positive near-term catalyst for risk assets, especially for sectors and companies most exposed to the US-China tariff war. He noted that after the announcement, the US 10-year Treasury yield moved higher, US equities rallied, and the US dollar strengthened, in-line with what analysts expected to see with firmer US growth expectations. 'Our base case remains that the US Federal Reserve will take a wait-and-see approach and cut rates only once in 2025,' he said. He also said this bodes well for what can be expected from US trade talks with other countries. Sue-Ann Tan is a business correspondent at The Straits Times covering capital markets and sustainable finance. Join ST's Telegram channel and get the latest breaking news delivered to you.
