Stocks Gain on Tech Tariff Pause, Dollar Falls: Markets Wrap

(Bloomberg) -- Asian stocks advanced after President Donald Trump paused import duties on a range of consumer electronics, lifting sentiment after a volatile week for markets.

Gauges in the region gained along with equity-index futures for the US and Europe as Trump halted some tech levies, though he indicated a specific tariff will be announced in due course.

While stocks got a temporary relief, concerns were building up in other corners of the market about the US economy with the dollar weakening to a fresh low for the year. Gold, a traditional haven asset, hit a record, indicating market participants still remain wary amid mounting confusion over Trump’s tariff agenda. US Treasury yields edged down across the curve.

The pause on duties on goods from smartphones to laptop computers - most of which are made in China — offers an interim reprieve for markets ravaged by Trump’s flip-flops on trade policy. Volatility shows little signs of easing after the White House signaled separate duties on tech products, including semiconductor chips, are being planned as Trump tries to rewrite global trade rules that he says aren’t in favor of the US.

“The amount of conflicting statements and policy-on-the run makes it impossible to trade short term,” said Matthew Haupt, a portfolio manager at Wilson Asset Management in Sydney. “The market is trying to look through the noise and assuming we will end up in a negotiated end game that is more favorable than current terms.”

The late-Friday reprieve — exempting a range of popular electronics from the 145% tariffs on China and a 10% flat rate around the globe — is temporary and a part of the longstanding plan to apply a different, specific levy to the sector, the White House said. Still, a pause in the duties indicates a willingness by Trump to compromise on a deal, according to some analysts.

“Markets are desperate to get some opportunistic optimism in and will take any relief they can find, especially when a large carveout such as electronics, is slated for lower lower tariffs,” said Singapore-based Vishnu Varathan, head of economics and strategy at Mizuho Bank.

A gauge of Asian technology shares rose 1.5%, with gains for Samsung Electronics Co. and iPhone assembler Hon Hai Precision Industry Co.

While the greenback struggled, yen optimism is spreading among hedge funds and asset managers as US tariffs drive haven demand at a time when traders are reassessing the Bank of Japan’s interest rate hike path. The yen appreciated 0.5% to just above the 142 level against the dollar, around its strongest since September.

Demand for hedging against potential dollar declines jumped to a five-year high as the Trump administration’s tariff policies threaten to sap US economic exceptionalism and undermine the greenback. Citigroup Inc.’s equity strategists downgraded US stocks citing reasons include trade tensions.

“The disdain to hold dollars remains front and center to markets,” said Chris Weston, head of research at Pepperstone Group Ltd. in Melbourne. “The questions being asked of the dollar are not one-day affairs either, and represent potential major structural changes afoot.”

Federal Reserve Bank of St. Louis President Alberto Musalem said there’s a near-term risk that inflation will rise while the labor market weakens, requiring policymakers to be vigilant as they monitor the economic data.

Gains for Asian stocks came after the S&P 500 jumped 1.8% on Friday following a report that a Federal Reserve official said the central bank is ready to help stabilize markets, if needed. Still, Treasury yields climbed Friday, with benchmark 10-year bonds capping their biggest weekly jump since 2001 as investors pulled back from US assets that are normally seen as a haven from financial turmoil.

Asian shares slumped for a third week last week after Trump rapidly escalated his trade war with China while announcing he would delay his so-called reciprocal tariffs that adversely impacted the region. In a sign that central banks in the region are bracing for the impact, the Monetary Authority of Singapore eased its policy settings for a second straight review.

China said the reprieve is a small step toward rectifying the wrongdoings and urged Washington to do more to revoke the levies. Strategists at Goldman Sachs Group Inc. cut their targets for key Chinese stock indexes for a second time this month, citing heightened trade tensions.

Chinese gauges rose Monday as expectations for stronger stimulus and hopes of an eventual deal outweighed concerns over a further escalation of trade tensions. Shares of electric vehicle makers extend gains after a news report said that China is in talks with the European Union to set minimum prices on EVs made in the Asian nation, instead of tariffs. Meanwhile, the country’s exports rebounded in March as companies raced to send goods before higher tariffs kicked in.

Japan at the weekend said it wasn’t planning to use its US Treasury holdings as a negotiating tool to counter US tariffs.

“Trade policy uncertainty continues to metastasize, creating issues not just for markets but also for foreign trading partners trying to cut deals in the next ninety days,” said Sarah Bianchi, a strategist at Evercore ISI, in a note Sunday.

In commodities, oil steadied above a four-year low as traders weighed the latest US moves. Goldman Sachs said the global oil market faces “large surpluses” this year and next as the trade war weighs on demand.

Some of the main moves in markets: 

Stocks

• S&P 500 futures rose 1% as of 1:18 p.m. Tokyo time
• Japan’s Topix rose 1.5%
• Australia’s S&P/ASX 200 rose 1.5%
• Hong Kong’s Hang Seng rose 2.4%
• The Shanghai Composite rose 0.9%
• Euro Stoxx 50 futures rose 2.5%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.2% to $1.1378
• The Japanese yen rose 0.4% to 142.94 per dollar
• The offshore yuan fell 0.3% to 7.3121 per dollar

Cryptocurrencies

• Bitcoin rose 1.2% to $84,462.54
• Ether rose 2.4% to $1,629.07

Bonds

• The yield on 10-year Treasuries declined three basis points to 4.46%
• Australia’s 10-year yield declined one basis point to 4.39%

Commodities

• West Texas Intermediate crude fell 0.3% to $61.33 a barrel
• Spot gold fell 0.1% to $3,233.09 an ounce

This story was produced with the assistance of Bloomberg Automation.

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