Asian markets resume downward trend following court's temporary stay on Trump's tariff measures
Markets across Asia experienced a downturn on Friday following a temporary reprieve granted to President Donald Trump's tariffs by an American court. The ruling, which initially found the tariffs to be unconstitutional, stalled their implementation, causing apprehension amongst traders a day after the judges made the decision.
The adverse market reaction came a day after a U.S. Court of International Trade ruling blocked most of the tariffs announced since Trump took office, stating that he had exceeded his authority. This decision was branded "horrible" by Trump and he urged for its immediate reversal.
The legal dispute could prolong volatility and potentially complicate trade negotiations between the U.S. and other nations. Though the legal battle temporarily halted the tariffs, it is anticipated that Trump will find alternative ways to impose them. It is also possible that the case may reach the Supreme Court.
In a separate ruling, a federal district judge in Washington, D.C. also deemed certain levies to be unlawful, giving the administration 14 days to submit an appeal. Trade experts have suggested that this development could have implications for negotiations between the United States and the European Union and the United States' agreement with Britain.
Kevin Hassett, director of the National Economic Council, allayed concerns, stating that "hiccups" caused by the judges' decisions would not affect ongoing negotiations. He also expressed optimism about three agreements being finalized soon.
Rodrigo Catril, from National Australia Bank, remarked that Trump's trade agenda remains intact despite the legal battle adding another layer of uncertainty. He clarified that the court case could potentially rule against the White House but that the president still has other avenues to impose tariffs.
Observers are now speculating about potential trade negotiations, including those between the U.S. and China. Hong Kong, Tokyo, Shanghai, Seoul, Manila, Mumbai, and Bangkok recorded significant declines, while Sydney and Wellington experienced gains.
The United States Treasury Secretary, Scott Besset, mentioned that discussions with China were currently stalled. Trump may need to have a conversation with President Xi Jinping to revive them, following their recent agreement in their trade war.
Meanwhile, U.S. Treasury Secretary Scott Bessent expressed that negotiations with China were "a bit stalled" and that Trump might need to speak to President Xi Jinping, weeks after the economic superpowers agreed on a truce in their trade war. He added that "given the magnitude of the talks, given the complexity, that this is going to require both leaders to weigh in with each other".
Uncertainty grew as Wall Street showed a tepid performance, with all three major indexes barely managing to eke out gains and sentiment also dampened by a report showing the U.S. economy contracted slightly in the first quarter, albeit at a slower rate than first thought. Disappointing readings on jobless benefits and pending home sales added to the more downbeat mood.
Investors remained wary due to high bond yields and Trump's plans to boost the budget deficit. On currency markets, the yen strengthened after inflation figures released in Tokyo exceeded expectations, fuelling speculation the Bank of Japan might raise interest rates in July.
Japan
- Nikkei 225: DOWN 1.2 percent at 37,965.10
- Tokyo - Nikkei 225: DOWN 1.2 percent at 37,965.10
Hong Kong
- Hang Seng Index: DOWN 1.2 percent at 23,289.77
- Hong Kong - Hang Seng Index: DOWN 1.2 percent at 23,289.77
Shanghai
- Composite: DOWN 0.5 percent at 3,347.49
- Shanghai - Composite: DOWN 0.5 percent at 3,347.49
London
- FTSE 100: UP 0.5 percent at 8,762.10
- London - FTSE 100: UP 0.5 percent at 8,762.10
Euro/dollar: DOWN at $1.1340 from $1.1368 on Thursday Pound/dollar: DOWN at $1.3480 from $1.3494 Dollar/yen: DOWN at 144.00 yen from 144.19 yen Euro/pound: DOWN at 84.12 pence from 84.22 pence West Texas Intermediate: UP 0.3 percent at $61.13 per barrel Brent North Sea Crude: UP 0.2 percent at $64.29 per barrel New York - Dow: UP 0.3 percent at 42,215.73
- The U.S. Court of International Trade's ruling temporarily halted President Trump's tariffs, causing apprehension in Asian markets.
- Despite the legal dispute, trade experts anticipate that Trump will find alternative ways to impose the tariffs, potentially prolonging volatility.
- In a related development, a federal district judge deemed certain levies to be unlawful, potentially affecting negotiations between the U.S. and the European Union and the U.S.'s agreement with Britain.
- The adverse market reaction was not limited to Asia; Japanese, Hong Kong, Shanghai, and other Asian markets recorded significant declines, while Sydney and Wellington experienced gains.
- The Dow Jones Industrial Average in North America showed a tepid performance, with gains barely managed, as investors remained wary due to high bond yields and Trump's plans to boost the budget deficit.
- Hong Kong's Hang Seng Index, Tokyo's Nikkei 225, Shanghai's Composite, and Japan's currency market experienced declines following the tariff-related legal battles.
- In the midst of these trade negotiations and uncertainties, the general news landscape continues to be dominated by politics, business, sports, international news, and finance.
