Asian Markets Power Higher After Trump's About-Face on TariffsUpdate
By Dow Jones Newswires Staff
Asian stock markets powered higher in morning trade, tracking an overnight rally on Wall Street after President Trump's decision to pause steep tariffs on a swath of countries that had been put into effect just hours before.
Trump on Wednesday said that he would place a 90-day pause on so-called reciprocal rates, which he had announced a week earlier on nations the administration views as "bad actors" on trade--with the exception of China, which now faces an even higher 125% tariff.
The pause "pulls stocks and the market from the edge of the cliff," Wedbush analysts said in a note. "This was the news we and everyone on the Street was waiting for."
"Now we would expect massive negotiations across the board over the coming months including China being front and center as the biggest wild card," Wedbush added.
Trump's about-face sent the Dow Jones Industrial Average 7.9% higher on Wednesday, its best day since 2020. while the tech-heavy Nasdaq surged 12%, its best day in 24 years.
In morning trade Thursday, Japan's Nikkei Stock Average gained 8.1%, South Korea's Kospi was up 5.1%, and Australia's S&P/ASX 200 rose 4.6%. Hong Kong's Hang Seng Index gained 3.1%, China's Shanghai Composite Index advanced 0.6% and Taiwan's Taiex Index surged 9.3%.
Prices of short-term government bonds in Japan, Australia, and New Zealand fell, dragged by the risk-on sentiment sparked by Trump's tariff pause. The yield on two-year JGBs rose 7.5bps to 0.680%, the yield on two-year Australian government bonds jumped 9bps to 3.3160%, and the yield on two-year New Zealand sovereign debt was 7bps higher at 3.2960%.
Asian currencies were mixed against the dollar as traders digested Trump's tariff announcements. The dollar fell 0.5% to 146.98 yen, but rose 0.3% to 1.3441 Singapore dollars. The Australian dollar dropped 0.4% to 0.6127 versus the greenback.
"Trump's objectives suggest the global trade war can persist," Commonwealth Bank of Australia's Carol Kong said. "Tariff rates could yet go higher," the economist and currency strategist added.
Write to Ronnie Harui at ronnie.harui@wsj.com