Asian stocks looked poised for a volatile session Thursday, mirroring Wall Street’s swings as investors weighed the uncertain fallout from escalating US-China trade tensions.
Equity futures pointed to gains in Shanghai and Tokyo, while those for Hong Kong fell and Sydney looked flat. The region will be digesting the implications of a spiralling trade dispute between the world’s biggest economies, after US President Donald Trump declared the US was now locked in a trade war with China.
There was a wild ride for stocks in the US overnight. After a rally that drove the S&P 500 up as much as 1.2%, the gauge turned lower around 1pm New York time. Nearly 30 minutes later, the US equity benchmark was back in the green. Treasuries stalled after two-year yields approached their lowest level this year, while a gauge of dollar strength slipped for a second day.
Tensions between Washington and Beijing showed little sign of easing. Even as Treasury Secretary Scott Bessent proposed a longer pause on high tariffs on Chinese goods to resolve a conflict over critical minerals, which have been roiled this week, Trump — when asked by a reporter if the world’s two largest economies are in for a sustained trade war if they cannot reach a trade deal — replied: “Well, you’re in one now.”
“We have a 100% tariff,” Trump added. “If we didn’t have tariffs, we would be exposed as being a nothing.”
In commodities, oil rose from a five-month low after Trump said Indian Prime Minister Narendra Modi had vowed to halt purchases of Russian barrels, a move that could squeeze global supply. Elsewhere, gold topped US$4,200 (RM17,762) an ounce for the first time as some investors sought havens.
Treasury yields edged higher across tenors on Wednesday. The rate on two-year notes closed around 3.50% after earlier trading within about three basis points of the low reached during April’s tariff-fueled market chaos.
Traders are piling into wagers calling for at least one outsized Federal Reserve interest-rate cut by year end, betting on the potential for more aggressive policy than other market watchers currently foresee.
Following one of the best six-month stretches for equities since the 1950s, the market has seen brief bouts of profit-taking in a move dubbed a “healthy reset” after a torrid surge. Those downward shifts haven’t lasted long on speculation that Federal Reserve interest-rate cuts will keep the positive momentum going for Corporate America.
Investors keeping a close eye on any headline around the tariff spat between the US and China quickly refocused on the fundamental factors that have powered an over US$15 trillion surge in the S&P 500 from April’s meltdown.
As the earnings season got under way, Morgan Stanley and Bank of America Corp jumped on solid results. Meantime, positive comments on artificial intelligence from ASML Holding NV boosted chipmakers. In late hours, United Airlines Holdings Inc reported better-than-expected earnings.
“Investors who are buying the dip are still driving the action, keeping sentiment firm even as technical indicators show signs of strain,” said Mark Hackett at Nationwide.
Meanwhile, Chinese Premier Li Qiang will visit Singapore later this month, people familiar with the matter said, in the first trip to the country by China’s No. 2 official in seven years as the governments seek to deepen relations.
In Japan, political tensions are ramping up as ruling party leader Sanae Takaichi called on the leaders of an Osaka-based opposition party to back her in a parliamentary vote to decide the prime minister expected next week.
Source: theedgemalaysia