SINGAPORE: Asian stocks climbed on Wednesday, buoyed by technology sectors, while the dollar weakened as increased U.S. tariffs on steel and aluminium came into effect, representing the newest development in the trade conflict that has unsettled markets for much of the year. Investor attention has been centred on the speed of trade talks and the absence of meaningful advancements. The deadline for U.S. trading partners to present their proposals for agreements that could help them evade Trump's substantial "Liberation Day" tariffs is Wednesday, just five weeks away. European stock futures indicated a positive start as the European Central Bank begins its two-day policy meeting, where a rate cut is anticipated on Thursday. In Asia, South Korea's stock market and currency soared as liberal presidential candidate Lee Jae-myung's win sparked optimism for rapid economic stimulus, market reforms, and reduced policy uncertainty.
The KOSPI index surged over 2 per cent to reach its peak since August 2024. This resulted in MSCI's widest index of Asia-Pacific stocks excluding Japan being nearly 1 per cent up. Japan's Nikkei increased by 0.8 per cent, whereas Taiwanese shares surged 2 per cent following Nvidia's influence on U.S. stocks on Tuesday. Data indicated that job openings in the U.S. rose in April, but layoffs also grew, signalling a decelerating labour market as tariffs affect the economic forecast. Investor focus has been on a potential conversation between U.S. President Donald Trump and Chinese leader Xi Jinping possibly occurring this week as strains between the leading two economies continue. On Friday, Trump alleged that China breached a Geneva pact concerning the reduction of tariffs and trade barriers. Beijing stated it would protect its interests and labeled the accusation as unfounded.
ALSO READ: Gold Loan Renewal System Discontinued Following RBI's New Guidelines
Chinese stocks increased on Wednesday as the blue chip index gained 0.58 per cent, and Hong Kong's Hang Seng index went up by 0.56 per cent. "While markets might be unresponsive to trade news, discussions between Trump and Xi continue to grab attention." "A significant agreement seems improbable, but any intensification could trigger a wave of risk aversion," stated Charu Chanana, chief investment strategist at Saxo in Singapore. In the meantime, Trump signed an executive order implementing, from Wednesday, his unexpected announcement last week that he was raising the tariffs on steel and aluminium imports that had been effective since March to 50 per cent from 25 per cent. "We think that the steel and aluminium tariffs are a model for other strategic tariffs that are on the way and probably will persist," remarked Thierry Wizman, global FX and rates strategist at Macquarie.
"Even so, there remains minimal motivation for a rally in the U.S. dollar to develop." Trump's fluctuating tariffs have caused investors to abandon U.S. assets in search of safer options, such as gold and various currencies, this year due to anticipated trade uncertainties impacting the global economy. The Organisation for Economic Cooperation and Development reported that the world economy is expected to decelerate from 3.3 per cent last year to 2.9 per cent in 2025 and 2026, revising its projections from March, primarily due to the repercussions of the Trump administration's trade conflict.
On Wednesday, the dollar rose 0.18% to 144.225 against the yen. The euro stood steady at $1.1368. The dollar index, reflecting the U.S. currency against six other prominent currencies, stood at 99.31, close to the six-week low of 98.58 reached on Monday. The index has decreased by 8.5% this year. In commodities, oil prices fell, impacted by a relaxed supply-demand equilibrium due to rising OPEC+ production and ongoing worries regarding the global economic forecast amid tariff conflicts. Brent crude futures fell 0.38% to $65.38 a barrel, while U.S. West Texas Intermediate crude dropped 0.41% to $63.15 per barrel. Gold remained relatively stable at $3,351.5 per ounce, with its yearly increase reaching an impressive 28% due to safe-haven demand.
FIRST Business Portal addressing the potential of business capability of North East Region.
