U.S. stock futures and dollar drop
MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.9% in light trade
U.S. stock futures and the dollar slipped in Asia on Monday as confusion over U.S. tariffs revived the “sell America” trade, while confidence in the entire AI sector was set to be tested by results from tech company Nvidia this week.
Gold rose and oil prices eased ahead of another round of talks between Iran and the U.S. due in Geneva on Thursday.
Uncertainty loomed large after the U.S. Supreme Court struck down President Donald Trump’s emergency tariffs, leading him to announce a new 10% rate on other countries, only to then lift it to 15%.
The tariff landscape is now more uncertain than before, uncertainty is not good news for any economy or market, said Rodrigo Catril, a senior FX strategist at NAB.
Unless common sense prevails, we could be entering a circular process where new tariffs are announced, then potentially overturned, only for new tariffs to be announced, and we do the dance again, he said.
It was not yet clear when these tariffs would be imposed, what might be excluded and whether every country would be imposed with 15%. Some, such as the UK and Australia, had 10% tariff rates under the former rules, while many countries in Asia had higher rates.
With so much up in the air Asian markets were mixed, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.9% in light trade.
Nikkei was closed for a holiday but futures traded down 0.8% at 56,675 versus a cash close of 56,825.
The chance of lower tariffs helped South Korea extend its bull run with a 0.5% rise, having already jumped 5.5% last week to all-time highs. Taiwan followed with an increase of 1.2% to a record high.
From the perspective of most Asian economies, the events of the last few days will lower the effective US tariff rate, at least in the short run, noted analysts at Goldman Sachs.
The investment bank said: China will enjoy the largest decline, 6.6pp by our estimate, followed by several South and Southeast Asian economies.