NEW YORK: Asian equities fluctuated in early trade as the threat of a broader global trade war and geopolitical uncertainty outweighed a rally in chipmakers that drove the S&P 500 to a record.
Equity indexes in Japan swung between gains and losses as automakers including Toyota Motor Corp. declined. Australian shares fell with National Australia Bank Ltd. sliding by more than eight per cent on a drop in earnings. Futures for Hong Kong and Shanghai pointed to declines. Treasuries were little changed after yields jumped Tuesday (Feb 18).
In early Asia hours, President Donald Trump threatened to impose tariffs on automobile, semiconductor and pharmaceutical imports of around 25 per cent, with an announcement coming as soon as April 2. His previous comments on tariffs were met with skepticism by some investors who saw it as a "bargaining tactic.”
"Japanese stocks are approaching the upper limit of their range, and are likely to soften as investors factor in President Trump’s tariff talk,” said Kohei Onishi, senior investment strategist at Mitsubishi UFJ Morgan Stanley. "Investors wary of tariff risk may not be involved in automobile stocks at the moment, so it is unlikely that there will be any surprise movements.”
The new duties, if implemented, would widen the president’s trade war. Trump previously announced 25 per cent tariffs on steel and aluminum that are set to take effect in March, but Tuesday’s comments are his most detailed yet in specifying other sectors that would be hit with fresh barriers.
"I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 per cent,” Trump told reporters Tuesday at his Mar-a-Lago club when asked about auto tariffs. On the drug imports, he said: "It’ll be 25 per cent and higher, and it’ll go very substantially higher over a course of a year.”
Meanwhile, top officials from the US and Russia met for a first round of talks over the war in Ukraine and raised the possibility of broader cooperation.
Intel Corp. surged on breakup speculation. Super Micro Computer Inc. jumped on a bullish outlook. Walgreens Boots Alliance Inc. soared as CNBC said a Sycamore Partners takeout is alive. Meta Platforms Inc. halted a 20-day rally.
There was a positive mood in China this week, stoked by President Xi Jinping’s embrace of tech leaders in a rare public meeting. That’s fueled optimism Beijing is shifting its stance to give the private sector a freer hand as it fights a trade war with Trump.
Meanwhile, a former deputy governor of the Bank of Japan, Hiroshi Nakaso, said the central bank is set to continue raising its benchmark interest rate toward one per cent for now and will likely look for further rate hike opportunities afterward, depending on economic conditions. The yen was little changed around 152 per dollar.
In the US, Federal Reserve Bank of San Francisco President Mary Daly said policy needs to remain restrictive until there’s more progress on inflation, which she expects will continue declining over time.
In other markets, oil snapped a three-session losing streak to settle near US$72 a barrel after OPEC+ delegates said the cartel may postpone supply increases set to begin in April. Gold surged 1.4 per cent, close to a new record high. - Bloomberg
