Asian stock rally fades fast along with US dollar after Trump’s trade deals

Cryptopolitan
Updated
Mitrade
coverImg
Source: DepositPhotos

Asian markets broke down on Tuesday just as fast as they had rallied on Monday. Traders across the region walked away from early gains after fresh fears over president Donald Trump’s trade decisions began creeping in.

According to Reuters, the rally that kicked off after a 90-day truce between the US and China failed to hold. Wall Street’s Monday surge didn’t carry over. European futures pointed lower.

Chinese stocks stayed flat. S&P 500 and Nasdaq futures slid during the Asian session. Trump’s temporary pause in tariff hikes wasn’t enough to convince the markets that anything permanent was on the table.

Asia turns cautious despite tariff reductions

The MSCI Asia-Pacific Index outside Japan dropped 0.2%, right after hitting a six-month high earlier that same morning. Fitch Ratings laid out the numbers. The US effective tariff rate fell to 13.1% after the announcement—down from 22.8% before—but that’s still much higher than the 2.3% average seen at the end of 2024, and the highest since 1941.

The market was already tense after Trump launched his tariff campaign back in early April. Since then, investors have been pulling money out of US assets and moving to safe havens like the yen, the Swiss franc, and gold.

Trump’s new terms reduce tariffs on Chinese goods from 145% to 30%, and China agreed to cut tariffs on US imports from 125% to 10%. That sounded like progress on paper, but it didn’t move the needle in the markets. The sense was that this was a tactical pause, not a resolution.

Hong Kong’s Hang Seng index fell 1.67%, clearly reacting to the weak confidence. Over in Japan, the Nikkei jumped more than 2%, reaching its highest level since February 25. But even that spike wasn’t enough to convince people the situation was improving.

Traders shift attention to inflation after trade pause

Investors are now waiting to see what actually happens once the 90-day trade pause expires. But even before that, eyes are locked on US inflation numbers expected later on Tuesday. Those figures could have an impact on where the Federal Reserve goes next with rate policy.

Matt Simpson, a senior market analyst at City Index, explained the thinking. “Should we be treated to another set of soft CPI figures, it could allow traders to refocus on Fed policy and the potential for cuts, and take some steam out of the dollar’s rebound,” Simpson said.

Right now, traders have walked back their rate cut expectations. At the peak of trade panic in April, they were betting on more than 100 basis points of cuts. That’s now down to just 56 basis points for the rest of the year.

US Treasury yields backed that up. The 2-year yield hit 3.9873%, and the 10-year was at 4.4512%, both sitting near one-month highs during Tuesday’s early trading session. That tells you people aren’t rushing into bonds the way they were last month.

In crypto, bitcoin stayed steady at $102,676, sitting above the $100,000 level it passed last week. No big moves in that space despite the broader market weakness. Traders weren’t using bitcoin as a flight-to-safety asset on Tuesday.

On the commodities side, oil prices dipped slightly after climbing to a two-week high on Monday when the trade agreement was first announced. As for gold, prices bounced back a bit after dropping 2% the day before. Investors who briefly dumped safe havens returned as confidence in the trade deal fell apart.

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

goTop
quote
Do you find this article useful?
Related Articles
placeholder
Jensen Huang Leads as Nvidia Executives Cash In Over $500 Million Amid Record Highs This MonthNvidia's filing with the SEC on June 26 revealed that since June 20, CEO Jensen Huang has sold a total of 300,000 Nvidia shares, valued at nearly $44.9 million.
Author  TradingKey
Jun 30, Mon
Nvidia's filing with the SEC on June 26 revealed that since June 20, CEO Jensen Huang has sold a total of 300,000 Nvidia shares, valued at nearly $44.9 million.
placeholder
Circle and KakaoPay Shares Tumble 20% — Stablecoin Stock Rally Faces Valuation Reality CheckA strong rally in stablecoin-related stocks swept the markets in June, with shares of Circle (CRCL.US) and KakaoPay (377300.KS) more than doubling amid rising investor optimism.
Author  TradingKey
Jun 30, Mon
A strong rally in stablecoin-related stocks swept the markets in June, with shares of Circle (CRCL.US) and KakaoPay (377300.KS) more than doubling amid rising investor optimism.
placeholder
Coinbase Hits New All-Time High — Outpaces Bitcoin with 38% Monthly SurgeCoinbase (COIN), the largest U.S.-based crypto exchange, has soared more than 38% over the past month, breaking its previous all-time high set in November 2021.
Author  TradingKey
Jun 27, Fri
Coinbase (COIN), the largest U.S.-based crypto exchange, has soared more than 38% over the past month, breaking its previous all-time high set in November 2021.
placeholder
US stock futures open with a new all-time high as Bitcoin stumblesStock futures in the United States opened Thursday night flat, but the S&P 500 still managed to press its face against a fresh record.
Author  Cryptopolitan
Jun 27, Fri
Stock futures in the United States opened Thursday night flat, but the S&P 500 still managed to press its face against a fresh record.
placeholder
Nvidia rose 4% on Wednesday, hits a new all-time highNvidia closed Wednesday as the strongest stock on the board, rising 4% and hitting a new all-time high, while the rest of the market barely moved.
Author  Cryptopolitan
Jun 26, Thu
Nvidia closed Wednesday as the strongest stock on the board, rising 4% and hitting a new all-time high, while the rest of the market barely moved.