By RAE WEE
SINGAPORE- Asian shares climbed and a manic bond selloff stabilised on Thursday after US President Donald Trump said he would temporarily lower the hefty duties he had just imposed on dozens of countries.
Following a days-long market rout that erased trillions of dollars from global stocks and jolted US Treasury bonds and the dollar, Trump on Wednesday announced a 90-day pause on many of his new tariffs in a shock reversal.
But US stock futures and the dollar were left out of Thursday’s relief rally despite an overnight surge on Wall Street, as investors’ confidence in the US administration crumbles and the “sell America” trade heats up.
“The world, political and financial is looking on with horror, not bemusement, at an administration that prioritizes the signing of an executive order for more water-power in shower heads, on the same day that the bond market breaks and investors question the long-term credibility of the administration having flip flopped on the largest of their policies, tariffs,” said Martin Whetton, head of financial markets strategy at Westpac.
Nasdaq futures slid more than 1 percent after a brief rally early in the Asian session, while S&P 500 futures sank 0.75 percent.
Both indexes had clocked their biggest daily percentage gains in more than a decade during Wednesday’s cash session.
The dollar fell 0.7 percent against the yen and 0.6 percent against the Swiss franc, failing to sustain its sharp overnight jump against the two safe haven currencies, highlighting market uncertainty over the longer term outlook.
“I think the initial move was just massive short cover, and this has given the world a bit of a breathing space, except for China… because markets were starting to price in the worst-case scenario,” said Khoon Goh, head of Asia research at ANZ.
“But now that the dust has settled, I think markets will seem to sort of figure out where to go from here.”
In the broader market, Japan’s Nikkei and European futures were among the standout winners of the rally in Asia.
The Nikkei surged 8 percent, EUROSTOXX 50 futures and DAX futures climbed roughly 8 percent each, while FTSE futures jumped 5.4 percent.
Trump’s reversal on the country-specific tariffs is not absolute. A 10 percent blanket duty on almost all US imports will remain in effect, the White House said. The announcement also does not appear to affect duties on autos, steel and aluminium that are already in place.
He also heaped pressure on China, saying he would raise the tariff on Chinese imports to 125 percent from the 104 percent level that came into effect on Wednesday.
China on Wednesday raised additional duties on American products to 84 percent and imposed restrictions on 18 US companies,
