Asian equities experienced a decline at the opening of Thursday trading following President Donald Trump’s latest actions regarding trade, which diminished the appetite for riskier investments. Stock indexes in Japan and Australia, along with equity-index futures for US stocks, showed declines during early Asian trading. Both the S&P 500 and Nasdaq 100 saw their largest drops in two weeks on Wednesday. The dollar continued its upward trend, while the Mexican Peso and Canadian dollar weakened. In Asia, automakers like Toyota Motor Corp. and Hyundai Motor Co. suffered losses. Shares of Ford Motor Co. decreased by 4.7% in after-hours trading, and General Motors Co. saw a 6.1% decline.
The rapidly changing position on US trade sanctions, affecting both allies and adversaries, has added to existing market concerns, as investors strive to evaluate the repercussions on global trade and economic growth. Market participants remain uncertain about how tariffs might influence inflation and economic growth, with recent data indicating softer economic momentum alongside sustained price pressures. “Trump’s move rocked market confidence once again,” stated Kyle Rodda, a senior market analyst at Capital.com, highlighting that the tariffs impose further strain on a significant industry and raise questions regarding whether the Trump administration’s trade measures will continue beyond “Liberation Day.”
President Trump signed an order implementing a 25% tariff on all cars not manufactured in the US, effective April 2. However, he noted that reciprocal duties, which will be disclosed next week, will be “very lenient.” Additionally, Trump mentioned a potential tariff reduction for China to facilitate a deal involving ByteDance Ltd.’s social video platform TikTok with an American company.
US equities fell on Wednesday, with the S&P 500 dropping over 1%, primarily driven by the group of megacaps known as the “Magnificent Seven,” whose quarterly selloff is turning out to be the worst since 2022. Nvidia Corp. and Tesla Inc. each fell by at least 5.5%, while the Nasdaq 100 declined around 2%. A gauge of large banks ended an eight-day winning streak. Concerns about the global trade war’s economic impact are affecting liquidity in US stocks, potentially increasing volatility across broader markets. Liquidity in S&P 500 stock-index futures, as measured in the most-active contract, has reached a two-year low, according to data from Deutsche Bank AG.
In Asia, investors are closely monitoring Indonesian markets as the central bank affirmed the nation’s strong economic fundamentals. Furthermore, a member of the Chinese central bank’s monetary policy committee remarked to Bloomberg TV that a stimulus package announced in September had stabilized the economy, allowing policymakers to concentrate on structural reforms.
The dollar rose by 0.3% on Wednesday, while the yield on 10-year Treasuries increased by four basis points to 4.35%. Federal Reserve Bank of St. Louis President Alberto Musalem expressed uncertainty about the temporary nature of tariff impacts, warning that secondary effects could lead officials to maintain interest rates longer than anticipated. This view contrasts with Fed Chair Jerome Powell, who stated after last week’s central bank policy meeting that the effects would be temporary.
“While we consider substantial increases in US tariffs will impact the US economy, we do not foresee a US recession,” said Carol Kong, a strategist at Commonwealth Bank of Australia. However, she noted that market participants might still price in an increased risk of a US recession with the announcement of additional tariffs, potentially strengthening the dollar against major currencies.
In the commodities sector, oil maintained its gains after US crude inventories experienced their largest decline since December. Gold remained steady near a record high.
