Delhi, 12 May (H.S.): Asian stocks and US equity-index futures experienced gains while the dollar strengthened, fueled by substantial progress in US-China trade talks, leading to a risk-on sentiment. Markets in Australia, Japan, and South Korea opened positively, with Japan’s Topix index marking its longest winning streak since October 2017. Futures for the S&P 500 and Nasdaq 100 increased by over 1.2%, alongside rising oil prices, while gold saw a decline of 1.5%. The dollar appreciated against other major currencies, and the yield on the 10-year US Treasury rose by 3 basis points.
Though the S&P 500 has almost regained its pre-tariff levels, further increases hinge on easing trade tensions, as ongoing tariffs could negatively impact global economies.
Homin Lee from Lombard Odier noted that the optimistic tone of talks may lift investor sentiment toward Asia-Pacific equities. Following two days of discussions in Geneva, US officials indicated fewer differences remained in negotiations, which Chinese officials also supported, highlighting a sustainable development in US-China relations.
Trump temporarily halted the most severe tariffs on most countries, excluding China, which led to a rally in the S&P 500. Last week’s trade agreement with the UK also boosted optimism about potential trade deals, despite some disappointing details. Valentin Marinov, head of G-10 FX research at Credit Agricole, noted that easing trade and geopolitical tensions could enhance market risk sentiment, benefiting risk assets and currencies while negatively impacting safe-haven currencies like the yen, Swiss franc, and euro.
Additionally, the ceasefire between India and Pakistan, along with potential talks between Russia and Ukraine, may further support risk assets. Currently, US tariffs on Chinese imports have escalated to 145%, while China imposes a 125% duty on US goods, amid roughly $700 billion in annual trade. The US aims to reduce tariffs below 60%, anticipating that China could agree to similar reductions. However, US businesses are feeling pressure, with companies like UPS, Ford, and Mattel retracting earnings guidance amidst these trade tensions.
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Hindusthan Samachar / Jun Sarkar
