NEW YORK: Asian equities were headed for gains on Friday (Feb 14) as markets reacted positively to signs the reciprocal US tariffs may be weeks from coming into effect, raising the prospect for negotiations.
Shares in Australia and Japan and equity index futures for Hong Kong all advanced, indicating a region-wide stock gauge may climb for a third day. An index of Chinese companies that trades in the US rose more than one per cent in New York trading. A measure of global stocks closed at a record high.
The S&P 500 rose one per cent while the Nasdaq 100 climbed 1.4 per cent as big tech outperformed. Tesla Inc. and Nvidia Corp each rallied over three per cent, while Meta Platforms Inc. climbed for a 19th straight day.
US President Donald Trump ordered his administration to consider imposing reciprocal tariffs on numerous trading partners, singling out Japan and South Korea as nations that he believes are taking advantage of the US. Investors appeared to express some relief in the timeline for the process though, which involves proposing levies on a country-by-country basis. Howard Lutnick, Trump’s nominee to lead the Commerce Department, told reporters the work could take until April to complete.
"President Trump is seeking to level the global playing field by implementing reciprocal tariffs against nations that maintain levies on the US,” Jose Torres at Interactive Brokers said earlier this week. "But investors are starting to realise that much of the talk is hardly going to come to fruition with the rhetoric increasingly appearing to be a negotiation tactic.”
Treasuries were little changed in early Asian trading after a rally in the prior session. Australian and New Zealand yields fell early Friday. A gauge of dollar strength was little changed after falling Wednesday.
Trump also said he would discuss Indian purchases of US oil and gas with visiting Indian Prime Minister Narendra Modi. The meeting was overshadowed by the reciprocal tariffs announcement just hours before Modi arrived at the White House.
In Asia, US-based private equity firm KKR & Co. is considering investing in Nissan Motor Co. after the struggling Japanese automaker’s talks to combine with rival Honda Motor Co. failed.
Data set for release in the region on Friday includes unemployment in South Korea, gross domestic product for Malaysia and wholesale prices for India.
Meanwhile, oil settled little changed on Thursday, rebounding from the lowest since December, as a hazy timeline surrounding Trump’s tariff plans counteracted potentially easing risks to Russian supplies.
Wall Street traders looked past hot inflation data amid signs the Federal Reserve’s favoured price gauge will be softer than expected. The producer price index rose in January by more than forecast. However, several of its components that feed into the Fed’s preferred inflation measure - the personal consumption expenditures price index - were more favourable last month, registering declines in most health-care items and in airfares. The next PCE will be released on Feb. 28.
"While PPI was much higher than expected, with even higher revisions, the real data that goes into PCE was weaker,” said Andrew Brenner at NatAlliance Securities. "And PCE is the one that Jerome Powell and the Fed look at. So in reality, the numbers are better.”
Elsewhere in commodities, gold rose for a second day Thursday back toward a record high achieved earlier in the week. The precious metal has marched higher this year, powered by haven demand, setting successive records with potential to line up a test of US$3,000 an ounce. - Bloomberg
