TOKYO – Asian shares were mostly lower Wednesday as markets mulled the impact of tariffs being imposed by the United States and China.
Japan’s Nikkei 225 decreased by 0.2% to 38,727.19 in early trading. Australia’s S&P/ASX 200, on the other hand, saw a rise of 0.5% to 8,417.10. The Hang Seng in Hong Kong went down by 0.6% to 20,659.41, and the Shanghai Composite in China experienced a 0.3% drop to 3,239.74. Meanwhile, South Korea’s Kospi surged by 1.1% to 2,508.58 as investors capitalised on recent price dips and drew positivity from the overnight Wall Street surge.
Some experts believe that the tariffs imposed on China should be viewed separately from Trump’s actions towards other trading partners. There is a perception that Trump might prolong the imposition of tariffs on China, akin to his strategy during his initial term, in an effort to create a clearer distinction between the U.S. and its geopolitical rival.
Trump is moving forward with a 10% tariff on products imported from China by U.S. companies. In response, China announced its own set of tariffs on specific U.S. goods and initiated an antitrust investigation against Google on Tuesday. This latest development adds to the ongoing trade tensions between the two economic powerhouses.
China’s 15% tariff on U.S. coal and liquefied natural gas products, as well as a 10% tariff on crude oil, agricultural machinery and large-engine cars imported from the United States won’t take effect until Monday. That leaves time for negotiations between Trump and Chinese President Xi Jinping.
“Trade tensions haven’t exploded yet, but they’re simmering dangerously close to a full boil, and anyone brushing them off does so at their own risk,” said Stephen Innes, managing partner at SPI Asset Management.
On Wall Street, calm returned, as tech stocks led U.S. indexes higher following a strong profit report from Palantir Technologies, a darling benefiting from the artificial-intelligence boom.
The S&P 500 rose 0.7% a day after swinging sharply on worries that President Donald Trump’s tariffs could spark a trade war that would hurt economies around the world, including the United States.
The Dow Jones Industrial Average added 134 points, or 0.3%, and the Nasdaq composite climbed 1.4%.
Trump on Monday agreed to delay his taxes on U.S. imports of Canadian and Mexican products for a month. That bolstered Wall Street’s longstanding hopes that Trump’s tough talk on tariffs may be just that, talk. The hope is that Trump sees tariffs as a stick he can use in negotiations with trading partners rather than as a long-term policy.
That hope is built in part on traders’ belief that Trump would likely be turned off by the damage Wall Street would take if a worst-case, long-term trade war were to occur. Trump has pointed in the past to the stock market as a real-time measure of his performance.
But a trade war is still possible, and some analysts say more swings may be coming because Trump’s threats should be taken both seriously and literally.
“Investors have suggested the equity market is the US administration’s scorecard and any policy changes that hurt risk assets will be quickly dialed back,” Bank of America strategists led by Mark Cabana wrote in a BofA Global Research report. “We advise caution.”
The stock price of Google’s parent company, Alphabet, rose 2.5% even with China’s antitrust investigation.
Pharmaceutical giant Merck tumbled 9.1% despite beating sales and profit forecasts for the latest quarter. It gave a forecast for upcoming revenue that fell short of analysts’ expectations, due partly to a pause in shipments of one of its top-selling products to China.
All told, the S&P 500 rose 43.31 points to 6,037.88. The Dow Jones Industrial Average added 134.13 to 44,556.04, and the Nasdaq composite gained 262.06 to 19,654.02.
In the bond market, Treasury yields eased after a report indicated the U.S. job market may be adding less upward pressure on inflation. U.S. employers advertised fewer job openings at the end of December than economists expected, suggesting a slowing but still healthy job market.
The yield on the 10-year Treasury fell to 4.51% from 4.56% late Monday. The two-year yield, which moves more closely with expectations for what the Federal Reserve will do with short-term interest rates, eased to 4.21% from 4.25%
In energy trading, benchmark U.S. crude fell 20 cents to $72.50 a barrel. Brent crude, the international standard, declined 31 cents to $75.89 a barrel.
In currency trading, the U.S. dollar slipped to 153.41 Japanese yen from 154.30 yen. The euro cost $1.0386, inching up from $1.0382.
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