People walk past the headquarters of the People's Bank of China (PBOC), the central bank, in Beijing, China. - Reuters
NEW YORK: Asian stocks rose Tuesday (March 25) after signs that President Donald Trump’s trade sanctions will be narrower than feared helped propel US equities to one of its best sessions of the year.
A gauge of Asian shares edged higher following gains in Japan and Australia. Chinese stocks fluctuated while Hong Kong dropped. Treasuries were slightly up in Asian trading following a nine basis point climb in the ten-year yield to 4.33 per cent in the prior session. Wall Street’s risk-on bid lifted shares of nearly all stripes Monday in a rebound from a sharp selloff that has challenged the notion of US exceptionalism.
Markets gripped by anxiety about the economic impact of an all-out trade war got relief from signs the coming wave of US tariffs is shaping up as more focused than the barrage Trump has occasionally threatened. The president twice on Monday signaled trading partners would receive possible exemptions or reductions.
"Stocks look to continue to rally from oversold levels, and any reduction in potential tariff impacts will be an upward catalyst,” said Ivan Feinseth at Tigress Financial Partners. "I believe we have seen the worst of the market’s pullback, though we will continue to see increased volatility at the beginning of next month based on the outcome of President Trump’s tariff policies.”
In Asia, China’s central bank unveiled a new method for pricing its one-year loans to banks, the latest move in policymakers’ efforts to revamp their monetary toolkit. The People’s Bank of China announced that banks will be able to bid for different prices on its one-year loans, known as the medium-term lending facility.
In a sign that sentiment toward China is improving, money managers poured cash into exchange-traded funds that buy Chinese stocks last week after the government announced more measures to boost consumption and the economy. Two ETFs from Cathie Wood’s Ark Investment Management bought ADRs of Chinese search engine operator Baidu on Monday.
Later Tuesday, Australia’s Treasurer Jim Chalmers is due to unveil the government budget. Economists reckon it will show an underlying cash deficit in the 12 months through June 2026 of A$40 billion (US$25.1 billion), slightly better than the A$46.9 billion predicted in Treasury’s mid-year review in December.
"We said last week that we had already seen ‘peak chaos’ in US tariff policy,” said Thierry Wizman at Macquarie. "Events over the weekend seemed to confirm that regularisation and rationalisation of tariff policy is coming, followed by negotiations and concessions.”
Trump has touted his April 2 announcement as a "Liberation Day”, heralding the start of a more protectionist policy meant as retribution against trading partners he has long accused of "ripping off” the US. Nations in the crosshairs of US tariffs have rushed to set up meetings with Trump administration officials to offer concessions and other defensive responses in an effort to earn exceptions from the reciprocal tariffs.
In South Korea, Hyundai Motor Co. shares jumped as much as 7.5 per cent as its US investment plan of about US$21 billion in the US through 2028 to increase vehicle production and on other projects raised expectations it may be able to avoid higher US tariffs.
Blackstone Inc. President Jon Gray warned investors against making knee-jerk decisions around Trump’s tariff moves and instead advised waiting to see how the underlying negotiations play out. Federal Reserve Bank of Atlanta President Raphael Bostic on Monday cited the impact of tariff hikes impeding progress on disinflation for why he now sees just one interest-rate cut as likely this year, rather than two.
A growing chorus of central bankers and finance ministers around the world have expressed concern that a global trade war would inhibit economic growth and fuel inflation - a combination that would make it difficult to calibrate an effective interest-rate response.
Meantime, equity strategists from JPMorgan Chase & Co., Morgan Stanley and Evercore ISI are advising clients that the worst of the recent downturn is likely behind them, citing metrics from investor sentiment and positioning to favorable seasonality.
"The US equity pullback has put a dent in US outperformance over the rest of the world,” said BlackRock Investment Institute’s Strategists including Jean Boivin and Wei Li. "We stay overweight US stocks and see opportunities across global stocks.”
In commodities oil held gains as Trump said he would seek a 25 per cent tariff on nations buying crude and gas from Venezuela. - Bloomberg
