Asian Markets Brace for Volatility as Trump Unveils Tariffs
Tokyo, Japan - Asian equity markets are set for a cautious opening on Monday as investors react to President Donald Trump's announcement of tariffs on all steel and aluminum imports.
Commodities Decline
Commodity currencies, including the Australian and Canadian dollars, fell in early trading following Trump's comments. S&P 500 futures also declined, while equity futures in Japan and Hong Kong pointed towards losses.
China's Exemption
However, contracts in mainland China and a gauge of US-listed Chinese shares rose on Friday after Trump stated he would maintain the duty-free exception for low-value packages from China until collection systems for tariff revenue are established.
US Bond Markets
US bond futures opened with little change. Separately, Trump reported that Elon Musk's government efficiency team had identified irregularities in data from the US Treasury Department.
Friday's Market Performance
On Friday, the S&P 500 index fell 1% amidst heightened tariff concerns and data showing a decline in consumer sentiment. The US dollar strengthened, while US Treasuries fell across the yield curve as jobs figures indicated a moderating, yet solid, labor market.
Fed Chair Testimony
Investors will be closely monitoring the upcoming testimony of Federal Reserve Chair Jerome Powell on Tuesday as markets anticipate his views on the impact of tariffs and other policy shifts.
Chinese Economic Conditions
Chinese shares will be under scrutiny on Monday due to optimism surrounding the country's AI industry. However, a temporary spending surge during the Lunar New Year holiday could potentially mask deflationary pressures in China's economy.
South African Rand
The South African rand underperformed global peers in early trading after the US suspended aid due to allegations of human rights violations and genocide against Israel. South Africa's foreign ministry expressed concern over the inaccuracies in the accusations.
Commodities
Oil prices declined 2.1% last week amid concerns that Trump's tariffs on China would reduce demand. Gold, on the other hand, extended its six-week rally to a new record, marking the longest winning streak since January 2023.
Key Events This Week
* Monday: China's retaliatory tariffs on US goods take effect.
* Tuesday: European Central Bank President Christine Lagarde testifies to European Parliament.
* Wednesday: US CPI data release.
* Thursday: Eurozone GDP data release.
* Friday: Eurozone GDP data release.