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Business Recorder
14 hours ago
- Business
- Business Recorder
Asian stocks ease off recent peaks ahead of US tariff deadline
BENGALURU: Stocks in emerging Asian economies retreated on Friday from recent peaks as caution set in ahead of US President Donald Trump's July 9 tariff deadline, while currencies crawled higher as the dollar struggled to hold onto Thursday's gains. An MSCI gauge of equities in emerging Asia slid nearly 1% from a 3-1/2-year high notched in the previous session. Stocks in South Korea and Taiwan, making up more than a third of the index, weighed the most. A trade deal announced on Thursday between the United States and Vietnam sparked hopes among emerging economies in the region for a potential breakthrough with Washington ahead of the July 9 deadline. But scant details on the deal, tariffs well above pre-April 2 levels, and little clarity on how trans-shipments from China would be levied mean Asian countries will have to straddle a fine line between the world's two largest economies. 'It would be remiss to ignore the critical pillar of US trade deals with the rest of Asia, which is trained on undermining China's economic reach and influence,' said Vishnu Varathan, head of macro research for Asia excluding Japan at Mizuho Securities. 'And so, other Asian economies will be particularly vulnerable to a two-sided geoeconomic squeeze given that their reliance on both China and the US is significant.' Cautious investors will be keenly watching Trump's approach to tariffs and whether trade partners can secure best deals for their countries before the deadline. In South Korea, the benchmark KOSPI fell 2% from a near four-year high, marking its worst drop since April 7. Taiwan's benchmark index slipped from a near four-month high. Stocks in the Philippines fell 0.7% from a more than six-week peak, while those in Singapore eased off from a record-closing high. Thai stocks came off a three-week peak, snapping a four-session rally. Vietnam's benchmark index slipped from its April 2022 high. The dong briefly touched a fresh low of 26,230 against the US dollar. It then recovered through the session to trade slightly higher.
Mint
a day ago
- Business
- Mint
Markets 90-day tariff pause rollercoaster nears an uncertain end
(Refiles to include dropped phrase "domestically held" in paragraph 27, no other changes to story) Pause on Trump's 'Liberation Day' tariffs expires on July 9 Stocks have flourished despite tariff volatility Major exporters to US still awaiting clarity Gold rises on inflation risks, global unrest, US debt worries GDANSK/LONDON, July 4 (Reuters) - The deadline U.S. President Donald Trump set for major trading partners to strike deals with Washington or face hefty tariffs expires next week, bringing to a close 90 days of volatility but leaving global investors in the dark over what will happen next. Trump's propensity to issue a threat, or impose a new tariff, only to reverse course shortly afterwards has led to turmoil over the past three months. Investors, however, have now become somewhat inured to this sort of policymaking on the fly. And, as a result, there is little evidence at this point that many are preparing for fireworks on July 9. Instead, most expect some kind of delay, pause or compromise. What that will look like, however, is anyone's guess. Here is a snapshot of where major markets are now, relative to where they were when Trump dropped his initial tariffs bombshell on April 2: Global stock markets have staged a strong recovery following the intense volatility triggered by Trump's tariff announcement. The MSCI World index, which fell 10% between April 2 and April 9, the day Trump paused the tariffs, has hit successive record highs and gained over 11% since the original "Liberation Day" announcement. Global equities got another boost in May, when the U.S. and China reached a temporary truce, pausing many tariffs for another 90 days. Geopolitical tensions, including Israel's recent strikes on Iran and Washington's subsequent bombing of Iranian nuclear sites, briefly reined in sentiment but have not derailed the broader rally. The S&P 500, which had lagged other major equity markets earlier in the year, has closed those gaps, gaining over 10% since April 2, and is neck and neck with the MSCI all-country index, which excludes the United States . There's an important caveat, however. The S&P has only hit record highs in dollar terms. The weakness in the U.S. currency has eroded the returns for overseas investors. In euro or Swiss franc terms, for example, the index is still about 10% below February's record high, while in pounds, it's 7% below the sterling-denominated peak. The U.S. dollar, widely regarded as the world's most powerful and stable currency, has suffered a knock to its reputation from Trump's tariffs and the subsequent 90-day pause. The dollar index, which reflects the U.S. currency's performance against a basket of six others including the euro and the Japanese yen, suffered its worst first half of the year since 1973, declining by approximately 11%. It has fallen by 6.6% since April 2 alone. Against the currencies of some of the United States' biggest trading partners, the decline has been even more marked. It has lost some 8% against the euro and the Mexican peso since then and 5% against the Canadian dollar. Vincent Mortier, the CIO of Europe's largest asset manager Amundi, said the euro has plenty more room to run, especially as U.S. debt worries are also driving the dollar down. "I won't be surprised if by the end of next year we start to revisit the $1.30 level," he said, highlighting that at its 2008 peak, the euro got as high as $1.60. FOR EXPORTERS, CERTAINTY IS THE PRIZE European shares have more than recovered losses suffered since Trump's "Liberation Day". But strength in the euro and anxiety over tariffs have kept them below March's record highs. Large exporting sectors such as pharma and autos, which make up around one-third of EU exports to the United States, have rebounded too, but have been more volatile. Brussels is reportedly open to a U.S. deal that would apply a universal 10% tariff on many of its exports, something several investors would view favourably should it be confirmed. Citi said markets risk being caught offside if tariffs are reimposed at 20% or reach 50%. "Trump is truly unpredictable, but if it's really around 10%, I think the markets will react very well," said Carlo Franchini, head of institutional clients at Banca Ifigest. The impact of the trade talks extends beyond Europe, however, with automakers in Japan also being watched. Citi's base case is for a sustained 25% tariff, while a surprise cut to 10% could unlock a 50% upside for Japanese auto stocks. Gold has featured as the hedge of choice against an array of risks, from tariff-induced inflation, to geopolitical risk and a shift away from the U.S. dollar. The price has hit record after record, rising 26% so far this year to around $3,330 an ounce. Gold has eclipsed bitcoin , which has gained about 14% year to date, and even Nvidia , the maker of chips that power AI capabilities, whose shares went parabolic last year and have risen about 18% this year. Since April 2, gold's ascent has gathered pace, fuelled by purchases from central banks, fund managers and even individuals. A survey by UBS Asset Management this week showed 39% of respondents said they planned to increase their domestically held gold holdings, compared with 15% last year. The independence of the Federal Reserve - whose chair, Jerome Powell, Trump has berated repeatedly for not cutting interest rates fast enough - is one of the key concerns cited in the survey. (Reporting by Canan Sevgili and Alberto Chiumento in Gdansk, Danilo Masoni in Milan and Alun John, Marc Jones and Amanda Cooper in London; Editing by Joe Bavier)
Japan Times
a day ago
- Business
- Japan Times
GPIF logs $61 billion loss as weak dollar hits overseas assets
The Government Pension Investment Fund (GPIF) has suffered a quarterly loss as a depreciating dollar dragged down the value of its overseas securities and domestic assets slumped. GPIF, one of the world's largest state pension funds, lost ¥8.815 trillion ($61.1 billion), or 3.4%, in the January-March period, with assets totaling ¥249.8 trillion at the end of the quarter, it said in Tokyo on Friday. On an annual basis, the fund had a 0.7% return. The quarterly loss came as the rumblings of a global trade war due to higher U.S. tariffs hurt equities and the outlook for interest-rate cuts dragged down the dollar against the yen. GPIF incurred losses on all four of its asset classes for the first time since July-September 2022. "The January-March investment performance was mainly due to a sharp decline in foreign stocks,' GPIF President Kazuto Uchida said at a news conference after the announcement of the results. "We are considering increasing the ratio of active management.' Overseas investments slumped 6% for stocks and 2% for bonds during the quarter. Japanese stocks dropped 3.5%, while domestic debt slid 2.2%. During the quarter, the MSCI All-Country World Index of global stocks fell 1.7% and the S&P 500 dropped 4.6% as the Topix lost 4.5%. Yields on 10-year Treasurys dropped more than 30 basis points, while benchmark Japanese bond yields climbed around 40 basis points. The dollar fell 4.6% against the yen.
New Straits Times
a day ago
- Business
- New Straits Times
FX steady, stocks retreat as caution lingers ahead of Trump's tariff deadline
NEW YORK: Emerging market currencies were mixed on Friday, while stocks headed lower as markets remained cautious about the progress of trade deals with the US ahead of President Donald Trump's tariff deadline. Trump said that his administration will begin sending letters to 10 to 12 countries on Friday, informing them of tariff rates their exports would face after the July 9 deadline expires. Only the UK, Vietnam and China have signed trade agreements with the US as yet, with others scrambling to clinch one before the sweeping duties come into effect and threaten economic growth. "Many observers assume that a tariff of at least 10 per cent will ultimately be agreed for most trading partners... even if the final rate in the US were to be significantly higher than last year, markets seem to assume that this will not trigger a major economic crisis," said analysts at Commerzbank. "The markets seem to have abandoned the worst-case scenario and are assuming that the economy will ultimately weather Trump's tariff policy." Moreover, some concerns over the fiscal health of the US remained as the Congress passed Trump's tax-cut and spending package on Thursday. It is estimated to add over US$3 trillion to the US fiscal debt. The dollar index was flat on the day, still trading around multi-year lows. Trading was expected to be thin as markets in the US were closed for the 4th of July holiday. MSCI's index tracking global emerging market currencies was 0.2 per cent lower, but was looking at its fifth weekly gain. Emerging European currencies were subdued against the euro, but the Polish zloty fell 0.2 per cent. A report said that central banker Ludwik Kotecki sees room for two 25 basis point interest rate cuts this year, after the bank delivered a surprise trim of the same magnitude earlier this week. The Czech crown was slightly higher, after a flash estimate put annual inflation in June in-line with expectations and retail sales continued to show solid growth. Turkey's lira was little changed against the dollar, and so were its stocks. The stocks index was set for its biggest weekly gain since March. South Africa's rand edged 0.3 per cent lower, while its stocks were flat. Bourses in emerging European economies were also lower, with ones in Poland and Hungary down 1.2 per cent and 0.4 per cent respectively. Poland's blue chip index was set for a fourth week of gains. MSCI's gauge of global EM stocks was down 0.6 per cent, but was set to log marginal gains this week. Investors took on more riskier assets this week in a bid to diversify away from US amid mounting fiscal worries, and after strong jobs data on Thursday bolstered risk appetite globally.
New Straits Times
a day ago
- Business
- New Straits Times
Asian stocks retreat from recent peaks as US tariff deadline looms
SINGAPORE/HONG KONG: Stocks in emerging Asian economies pulled back on Friday from recent peaks, as market participants took a cautious stance ahead of US President Donald Trump's July 9 tariff deadline, while regional currencies dipped against a steady US dollar. 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.
