NEW YORK: Asian shares edged lower at the open after President Donald Trump said he won’t delay the July 9 deadline for imposing higher levies on trading partners.
A regional stocks gauge fell 0.2 per cent. Japanese stocks declined one per cent after Trump threatened to hike tariffs on the country and deepened his criticism of Japan for not accepting US rice exports. A gauge of the dollar slipped in early Asian trading after touching its lowest since 2022 in the prior session. Treasuries were steady Wednesday after yields rose on Tuesday (July 1).
Investors are closely watching how Trump decides to handle the current pause on his April tariffs, which he put on hold for 90 days to allow time for talks. Stock markets - which once swung wildly on trade headlines - appear to see little risk, as equity indexes sit near all-time highs. The calm is being fuelled by expectations that Trump will extend his tariff deadline based on his pattern of threatening first and backing down later.
"While US stocks are probably overly optimistic, international stocks have been prone to an overly pessimistic knee-jerk response each time Trump escalates,” said Phillip Wool, head of portfolio management at Rayliant Global Advisors Ltd. "It’s not surprising at all to see Trump holding the prospect of a July 9th impasse and a painfully high tariff out as a threat to push for better deals. There’s also an element of political theatre here.”
Trump for weeks has sought to exert leverage over trading partners with threats to set high levies on governments he sees as being difficult. His top economic adviser, Kevin Hassett, earlier signaled agreements would be announced after the July 4 holiday and the signing of the tax and spending bill the US Senate approved.
Trump’s latest tariff comments don’t pose a major threat to Japanese stocks, said Neil Newman, head strategist at Astris Advisory Japan.
"I read from his rhetoric President Trump has run out of things to complain about,” he said. "I believe there is too much on the Japanese negotiation table for the Americans to walk away from, but we know Trump will push to the limits to get more. This is just noise.”
Meanwhile, US job openings hit the highest since November, largely fueled by leisure and hospitality, and layoffs declined. Fed policymakers have consistently characterised labour-market conditions as strong in recent weeks. Fed Chair Jerome Powell repeated that the US central bank probably would have cut rates further this year absent Trump’s expanded use of tariffs, although he didn’t rule out easing at its meeting later this month.
The government’s June employment report, due Thursday, is expected to show a slowdown in nonfarm payroll growth and an uptick in the unemployment rate.
Separate data Tuesday showed US factory activity contracted in June for a fourth consecutive month as orders and employment shrank at a faster pace, extending the malaise in manufacturing.
Trump’s US$3.3 trillion tax and spending cut bill passed the Senate after Vice President J. D. Vance’s tie-breaking vote. House lawmakers are returning to Washington from a holiday week to vote Wednesday on the Senate version of the bill but face Republican resistance from moderate and ultra-conservative GOP lawmakers.
In commodities, gold held an advance, after rallying two per cent over the previous two sessions while oil steadied in early Wednesday trading. - Bloomberg
