Asian Stocks Climb as Trade Tensions Ease, Investors Eye US-China Call

Tokyo, June 27, 2023 - Asian equity markets rebounded on Tuesday after US President Donald Trump postponed tariffs on Mexico and Canada and indicated further talks with China.

Market Summary:

* Hong Kong's Hang Seng Index and Japan's Topix rose, while Australia's S&P/ASX 200 gained moderately.
* US futures advanced, with the S&P 500 futures up 0.4%.
* The US dollar strengthened against G-10 currencies, while oil prices declined.

Trump's Tariff Delay:

President Trump's decision to delay tariffs on Mexico and Canada calmed market sentiment, reversing Monday's risk-averse trend. Investors are now focusing on a planned phone call between US and Chinese officials.

China Tariff Uncertainty:

Trump's administration plans to engage in talks with China, raising hopes for a potential reprieve on the 10% tariff scheduled to take effect on Tuesday night. However, uncertainties remain regarding the prospects of a deal.

Market Sentiment and Economic Impact:

Market positioning in China and other Asian markets remains cautious compared to the 2018 US-China trade escalation. Analysts believe markets may react more orderly this time around.

The potential impact of a trade war on the resilient US economy remains a concern, as evident in the bond market's divergence in short- and long-term Treasury yields.

Federal Reserve Cautiousness:

Federal Reserve Bank of Chicago President Austan Goolsbee urged caution in reducing interest rates amid the uncertainties introduced by the Trump administration's trade policies. Other Fed officials are scheduled to speak later Tuesday.

Key Market Movers:

* Stocks: Euro Stoxx 50 futures rose 0.2%.
* Currencies: The euro fell against the US dollar, while the Japanese yen declined slightly.
* Cryptocurrencies: Bitcoin retreated slightly, while Ether gained.
* Bonds: The yield on 10-year US Treasuries remained stable.
* Commodities: West Texas Intermediate crude oil fell, while gold prices edged higher.