Asian markets traded mixed on Wednesday as the U.S. dollar steadied after posting its steepest one-day decline in nearly a month, with traders weighing a softer U.S. inflation print that raised bets on monetary easing by the Federal Reserve.
Taiwan stocks rose as much as 1.74% to their highest since March 28, while shares in Indonesia advanced 1.78% to their best session in over a month, reacting late to the U.S.-China trade breakthrough during the weekend.
Indonesia was closed on Monday and Tuesday for a national holiday. On the other hand, equities in Thailand, Singapore and Malaysia were down more than 0.2%, each.
"There will be a close watch on how countries such as Japan, South Korea, Taiwan and Thailand fare in trade negotiations, as any successful deal on their part could be a boon for their respective currencies if capital inflows increase," said Tim Waterer, a market analyst at KCM Trade.
The weekend agreement in Geneva exceeded market expectations, with the U.S. dropping extra tariffs imposed on China this year to 30% from 145%, while China cut its retaliatory measures to 10% from 125%.
Markets are betting on two Fed rate cuts by this year-end, including a September quarter-point reduction - as tepid U.S. inflation data strengthened the easing argument through smoothening global trade frictions.
The U.S. dollar index, which measures the currency against six major counterparts, traded flat at 100.87 following its biggest decline in more than three weeks overnight.
The Taiwan dollar strengthened 0.6% in its best session in over a week, rebounding from a six-day slide as foreign investors poured funds into local equities despite early central bank intervention, according to UBS analysts.
Last week's 6% two-day surge in the Taiwan dollar - its largest on record - came amid speculation about currency appreciation commitments in potential U.S. trade talks, though Taiwan's central bank and president firmly denied such arrangements.
The Indonesian rupiah and Thai baht both weakened 0.3%, while the Indian rupee and Malaysian ringgit each gained 0.2%. The rupiah is weathering capital flight as rising U.S. yields lure investors away, while heightened concerns about Indonesia's fiscal position - relative to regional peers - have dampened economic confidence, Waterer said.
MSCI's broadest index of Asia-Pacific shares outside Japan was up more than 1% in early trade after U.S. stocks climbed back into the positive territory for the year, erasing losses triggered by Trump's chaotic rollout of sweeping tariffs.
HIGHLIGHTS:
** Malaysia's economy likely lost momentum in first quarter
** Thai central bank says policy accommodative, no deflation - Reuters
