SINGAPORE – Stocks ticked sideways on Tuesday while the dollar headed towards its largest monthly fall for years as investors braced for the trade war to be felt in earnings and economic data.
US President Donald Trump’s tariffs have rattled faith in US assets and even though numerous backdowns have helped the S&P 500 recover much of its early April losses, the dollar has managed only to steady, without a big rebound.
It slipped overnight when US Treasury Secretary Scott Bessent told CNBC it was “up to China to de-escalate” tariffs, which sit at 125 percent for most US exports to China.
A holiday in Japan thinned currency trade in the Asia session, leaving most pairs steady. But at $1.1409 and up 5 percent in April, the euro is set for its largest monthly rise on the dollar in almost 15 years, while the dollar’s 7 percent drop on the safe-haven Swiss franc is the largest in a decade.
Nikkei and S&P 500 futures drifted higher, helped by officials foreshadowing a softening in automotive tariffs, though investors were holding out for more meaningful relief on the eye-watering 145 percent US tariffs on China.
China has moved to make some exemptions but has held off on stimulus, betting Washington blinks first.
China’s foreign ministry also said President Xi Jinping had not spoken to Trump recently, nor were their respective administrations trying to strike a tariff deal, contradicting the US president’s claim in an interview with Time magazine.
Hong Kong’s Hang Seng was up 0.3 percent in early trade and the mainland blue chip index fell 0.2 percent.
First-quarter GDP and April US jobs figures due later in the week are likely to be supported by front-loaded purchases to beat out the new taxes, J.P. Morgan analysts said in a note, but a drop in China shipments suggests a reckoning may be due soon.
