PETER’S BUSINESS & FINANCE BRIEFING – Thursday 03 April 2025, 06:00 Hong Kong
● US hits major trading partners with steep reciprocal tariffs ● US to impose 25% tariff on all foreign-made cars from midnight ● China ties US talks to tariff removal as stalemate deepens
Thursday’s Opening Call
Hang Seng (Hong Kong) Projected Open: 23,206 +3 points +0.0%
Nikkei 225 (Japan) Projected Open: 34,410 -1316 points -3.7%
Quick Summary - 4 Things To Know Before Asian Markets Open
On what has been dubbed “liberation day”, the US will impose reciprocal tariffs on China of 34% and hit the EU with a levy of 20%, Donald Trump announced on Wednesday as he detailed a raft of new restrictions targeting America’s trading partners. The minimum tariff is 10% but will be higher for what Trump perceives as worse trade offenders. The UK, Australia and Singapore will all be hit with the minimum 10% reciprocal tariffs.
Trump has hit some of the poorest countries in the world with the highest tariffs. Vietnam (with tariffs of 46%), Laos (48%), India (26%), Pakistan (29%), Bangladesh (37%), Sri Lanka (44%) and Cambodia (49%) were among other countries that would face steep tariffs, Trump said. Among other Asian nations, Japan has been hit with tariffs of 24%, despite intense lobbying by Prime Minister Ishiba for an exemption. South Korea faces reciprocal tariffs of 25% while Taiwan gets 32% tariffs.
US stock index futures fell sharply in after-hours trading as Donald Trump unveiled sweeping tariffs of a minimum 10%, but even higher for some countries. Dow futures lost 1140 points, or 2.7%. S&P 500 futures dropped 3.9%. Nasdaq-100 futures lost 4.7%. Apple and Nvidia shares dropped in after-hours trading as Trump announced he will impose a 32% tariff on Taiwan and a 34% tariff on China. Apple shares were down about 8%, while Nvidia shares were down 4%. The two companies, along with other large US tech groups, are heavily dependent on Taiwan Semiconductor Manufacturing Company, which produces most of the world’s most advanced semiconductors.
China’s top diplomat called on the US to remove tariffs it imposed on Chinese goods for Beijing’s alleged role in America’s fentanyl crisis before holding any talks on the matter, deepening a stalemate weighing on trade ties between the world’s two largest economies. “If the US side really wants to solve the fentanyl problem, then it should cancel the unjustified tariff increase and engage in equal consultation with the Chinese side,” Chinese Foreign Minister Wang Yi said in an interview with Russian state-run news service RIA Novosti on Tuesday. “If the US side persists in exerting pressure and even continues to engage in blackmail, China will resolutely counteract it,” Wang said. Wang’s demand came over a week after Donald Trump’s ally Steve Daines met with top Chinese officials and asked Beijing to stop the flow of the drug’s ingredients into the US as a condition for talks. The opposing requests dim the prospect of high-level talks to ease tensions.
US Hits Major Trading Partners With Steep Reciprocal Tariffs
On what has been dubbed “liberation day”, the US will impose reciprocal tariffs on China of 34% and hit the EU with a levy of 20%, Donald Trump announced on Wednesday as he detailed a raft of new restrictions targeting America’s trading partners. The minimum tariff is 10% but will be higher for what Trump perceives as worse trade offenders. The UK, Australia and Singapore will all be hit with the minimum 10% reciprocal tariffs. “For decades our country has been looted, pillaged and raped,” said Trump to an audience that included cabinet members and autoworkers. “It’s not going to happen anymore.” “We will calculate the combined rate of all their tariffs… and because we are being very kind … we will charge them roughly half of what they are charging us.” But that halved figure includes “the combined rate of all their tariffs, non-monetary barriers and other forms of cheating,” he said.
Trump has hit some of the poorest countries in the world with the highest tariffs. Vietnam (with tariffs of 46%), Laos (48%), India (26%), Pakistan (29%), Thailand (36%), Indonesia (32%), Philippines (17%), Malaysia (24%), Bangladesh (37%), Sri Lanka (44%) and Cambodia (49%) were among other countries that would face steep tariffs, Trump said. Among other Asian nations, Japan has been hit with tariffs of 24%, despite intense lobbying by Prime Minister Ishiba for an exemption. South Korea faces reciprocal tariffs of 25% while Taiwan gets 32% tariffs.
At the same time, the US will implement a 25% tariff on all foreign-made automobiles, President Donald Trump confirmed. The tariff will take effect at midnight. Trump, in his speech, said, “none of our companies are allowed to go into other countries.”
US officials said Mexico and Canada will for now avoid the US’s so-called reciprocal tariffs and will instead continue to have the levies Donald Trump applied to their goods over border security and fentanyl issues. Trump has imposed tariffs of 25% on all goods that do not comply with the terms of the 2020 USMCA trade agreement, but tariff-free trade remains in place for all goods that comply with the deal. US officials said that once the fentanyl issues were resolved, then Canada and Mexico would move into the new reciprocal tariffs “regime”.
In the event at the White House Rose Garden, Trump promised what he calls “the Golden Age of America,” which he believes will see more jobs and domestic production ushering in a new age of domestic prosperity. “We will supercharge our domestic industrial base, we will open foreign markets and break down foreign trade barriers,” Trump said. “And ultimately more production at home will mean stronger competition and lower prices for consumers. We’re gonna come back very strongly.”
Investors warned the level of tariffs set out by Donald Trump would make retaliation almost inevitable, raising the risk of an escalating trade war. The EU has announced a “strong plan to retaliate” and said it was prepared to hit services exports, including from Big Tech. Measures could include suspending intellectual property rights or excluding companies from public procurement contracts. The EU is preparing a package of potential emergency measures to support parts of its economy that could be hit the hardest, alongside reforms to advance the bloc’s competitiveness in key sectors of its single market. The UK achieved a better outcome than the bloc, with talks on a trade deal under way and Trump giving Britain lower reciprocal tariffs than the EU.
Mark Carney said Wednesday Canada would implement retaliatory tariffs “to protect Canadian workers and our economy” after his first call with Donald Trump. Trade between the two countries is worth about C$1tn a year, according to the Canadian Chamber of Commerce trade tracker.
China, one of the main targets of Trump’s ire over trade, sought to swing things in its favour at the last minute. An article in the ruling Communist Party’s official newspaper highlighted that US farmers and tech companies have benefited from economic ties between the two sides. Chinese officials have also made it clear that they’re prepared to fight back should Trump continue to exert pressure on the country.
Asian Automakers Already Feeling Effects Of Tariffs
For some automakers the impact of tariffs have already been felt. Mercedes may stop selling cheaper cars in the US as tariffs make sales economically unfeasible. And automakers including GM and Hyundai reported higher first-quarter vehicle sales as anxious Americans tried to get ahead of levy-related price hikes.
According to US car marketplace Carpro, Asian automakers made up six of the top eight automakers in the US by sales volume in 2024. Toyota took the top spot with 1.98 million vehicles sold during the year, beating domestic heavyweights Ford and Chevrolet. Japan’s Honda and Nissan were at fourth and fifth places, respectively, while South Korean brands Hyundai and Kia took the next two spots. Subaru came eighth. Japanese carmakers are particularly in dire straits, with Toyota likely to be the worst hit due to its huge US sales, according to Vivek Vaidya, global client leader for mobility at research firm Frost & Sullivan.
Asian carmakers have been particularly rattled by the newly announced tariffs on US auto imports and find themselves at the centre of US trade policy. For decades, they have invested billions in US manufacturing, from vehicle assembly to battery and steel production. Hyundai recently announced a US$21bn investment, including a US$5.8bn steel plant in Louisiana. Toyota announced new investments of more than Us$18bn since 2021 to expand its US manufacturing base. Asian carmakers face a choice between investing billions to expand US operations under rules that could vanish with the next administration or hold back and risk falling behind in a key market. However, these investments unfold over years. Building a new production facility can take up to five years. Localising a supply base, requalifying vendors under US regulations and scaling domestic capacity for parts historically sourced abroad are decade-long efforts. Unsurprisingly, automotive executives named geopolitical risk as one of their top planning concerns in a 2023 Deloitte survey. Automakers in a capital intensive, globally dependent industry, are left making billion-dollar bets in the face of unpredictable politics.
Walmart Keeps Price Pressure On Suppliers After Beijing Pushback
Walmart is continuing to push Chinese suppliers to cut prices to offset President Donald Trump’s tariffs, even after Beijing officials summoned the US retailer’s executives last month to discuss the issue, according to a Bloomberg News report. The world’s largest retailer has not backed down from its requests to suppliers to cut prices by as much as 10% for each round of tariffs, essentially asking them to shoulder Trump’s duties, according to the report. Walmart’s unchanging stance even after being summoned by government officials and warned by state-affiliated social media of potential retaliation from Beijing, reflects the quandary for Chinese companies as Trump’s tariffs add stress on top of the slowing domestic economy. Walmart's negotiations with suppliers are happening across product categories, and some Chinese manufacturers are finding it difficult to meet the retailer's demands, leading them to explore alternative manufacturing locations in Asia.
Fed’s Barkin Says Tariffs Could Reduce Jobs & Raise Inflation
Federal Reserve Bank of Richmond President Tom Barkin said that a price shock from tariffs could result in a “cage match” between frustrated consumers and businesses as to who will bear the burden, resulting in higher prices and lower demand, which could lead to reduced sales and job cuts. He said Trump's tariffs could raise both inflation and unemployment, creating a big challenge for the central bank. Fed officials left their benchmark lending rate unchanged last month in a range of 4.25% to 4.5% and published fresh forecasts that took on board some aspects of Trump’s economic policies. They raised their estimate for unemployment this year, with GDP seen slowing to 1.7%. Both core and headline inflation were marked up in their median estimates, which would mark the fifth consecutive year of inflation above their 2% target.
BOJ Warns Of Possible Hit To Global Trade From New US Tariffs
Planned new US tariffs could have a huge impact on world trade, Bank of Japan Governor Kazuo Ueda said on Wednesday, hours before President Donald Trump was set to unveil reciprocal tariffs. The expected move will come on top of US tariffs on imports of aluminium and steel imports, as well as higher duties on all goods from China. Ueda said he would like to share views with counterparts in the G20 on how higher US tariffs could affect the global economy at a meeting of the grouping's finance leaders this month in Washington, Reuters reported Wednesday. "The impact of US tariff policy on the global economy is highly uncertain," Ueda told Japan's parliament. "But depending on the range and scale of US tariffs, they could have a big impact on each country's trade activity." He added, "another big question is how the tariffs could affect the sentiment and spending of households and companies." While higher tariffs are likely to push up US inflation in the short term, the longer-run effect is uncertain as the higher duties could cool US growth and curb its price growth, Ueda said. The BOJ has not confirmed if Ueda will attend the G20 meetings, though the governor and Japan's finance minister usually attend.
China Ties US Talks To Tariff Removal As Stalemate Deepens
China’s top diplomat called on the US to remove tariffs it imposed on Chinese goods for Beijing’s alleged role in America’s fentanyl crisis before holding any talks on the matter, deepening a stalemate weighing on trade ties between the world’s two largest economies. “If the US side really wants to solve the fentanyl problem, then it should cancel the unjustified tariff increase and engage in equal consultation with the Chinese side,” Chinese Foreign Minister Wang Yi said in an interview with Russian state-run news service RIA Novosti on Tuesday. “If the US side persists in exerting pressure and even continues to engage in blackmail, China will resolutely counteract it,” Wang said. Wang’s demand came over a week after Donald Trump’s ally Steve Daines met with top Chinese officials and asked Beijing to stop the flow of the drug’s ingredients into the US as a condition for talks. The opposing requests dim the prospect of high-level talks to ease tensions.
Wang made the comments during a visit to Moscow where he met with Russian President Vladimir Putin and Foreign Minister Sergei Lavrov. During his discussions, taking place just over one month ahead of a planned visit to Russia by Xi Jinping, Wang reiterated the importance of China-Russian ties, describing the two nations as “forever friends and never enemies.”
China Restricts Companies From Investing In US As Tensions Rise
China has taken steps to restrict local companies from investing in the US, according to Bloomberg News, in a move that could give Beijing more leverage for potential trade negotiations with the Trump administration. Several branches of China’s top economic planning agency, the National Development and Reform Commission, have been instructed in recent weeks to hold off on registration and approval for firms that are looking to invest in the US. There’s no sign that existing commitments by Chinese companies in the US and elsewhere, or China’s purchases and holdings of financial products including US Treasuries, would be affected, the report said. It’s unclear what prompted the NDRC to halt the processing of applications or how long this suspension might last. The move adds uncertainty for firms seeking to shift production abroad to bypass trade barriers and comes as China increases scrutiny of outbound investments amid record capital outflows and pressure on the yuan.
US Reaffirms Commitment To Taiwan
The US on Wednesday reaffirmed its commitment to supporting Taiwan as China extended to a second day its large-scale military exercises off the coast of the democratically governed island. The Chinese military has been practicing assaults on maritime and ground targets and blockade exercises to test the joint operation capabilities of its troops. “Beijing’s willingness to moderate cross-strait tensions is eroding,” analysts at Eurasia Group said, cautioning that possibilities for a “cross-strait crisis” this year are increasing.
“In the face of China’s intimidation tactics and destabilizing behaviour, the United States’ enduring commitment to our allies and partner, including Taiwan, continues,” Tammy Bruce, US Department of State spokesperson said in a statement. “China’s aggressive military activities and rhetoric toward Taiwan only serve to exacerbate tensions and put the region’s security and the world’s prosperity at risk,” the State Department said, adding that the US “opposes unilateral changes to the status quo, including through force or coercion.”
On Tuesday, China started military exercises around Taiwan involving the most naval vessels in nearly a year. China’s military said Tuesday its army, navy and rocket forces launched a joint exercise off the coast of Taiwan in what it described as a “stern warning” against forces looking to undermine peace in the Taiwan Strait. The military drills, designed to “close in on Taiwan from multiple directions,” are a “resolute punishment” for the island’s President Lai Ching-te administration’s “provocations for independence,” said Zhu Fenglian, a spokesperson for the Taiwan Affairs Office of the State Council. ″‘Taiwan independence’ means war and pursuing that agenda means pushing Taiwanese people into the danger of war,” the spokesperson said.
Politburo Members Swap Jobs In First For CCP
China’s ruling Communist Party has abruptly switched the roles of two Politburo members, according to the South China Morning Post, an unprecedented move that comes as Xi Jinping breaks personnel norms in his third term. Li Ganjie will move to head the United Front Work Department, which is in charge of projecting the party’s influence among the Chinese diaspora including in Hong Kong, Taiwan and elsewhere, the newspaper reported. He will replace Shi Taifeng, who takes over from Li at the helm of the party body that oversees senior job appointments, according to the SCMP.
There is no previous case of Politburo members swapping posts, the SCMP reported. There is no suggestion that Li or Shi have done anything wrong. Mixing up jobs could be a way for China’s top leader to prevent senior cadres from becoming overly influential and building cliques. China’s most-powerful leader since Mao Zedong has ousted three sitting ministers since unveiling his latest cabinet in 2023, and several senior military cadres. A flurry of appointments is expected at provincial and ministerial level this year, paving the way for the next Politburo line-up in 2027.
South Korea Inflation Accelerates Marginally In March
South Korea’s inflation climbed 2.1% year-on-year in March, higher than the 2.0% seen in February. This was also higher than the 2.0% rise expected by economists polled by Reuters. On a monthly basis, consumer prices rose 0.2% in March, slowing from February’s 0.3% increase, in line with forecasts. Core inflation in the country, which strips out prices of food and energy, increased 1.9% compared to the same period last year. This comes as the Bank of Korea has cut rates by a total of 75 bps in the current easing cycle, bringing its policy rate to a two-year low of 2.75%.
Hong Kong’s March Property Sales Rise To 4-Month High
Hong Kong’s property sales increased to the highest level in four months in March, according to two of the city’s largest agencies. Sales of new and lived-in homes, shops, office units, car parking spaces and industrial properties jumped by 55% to 6,657 lots, while the transaction value soared 61% to HK$45.63 billion (US$5.9bn) last month, according to estimates compiled by Midland Realty. Ricacorp Properties estimated that 6,672 lots changed hands, 54% higher than the month before. Buyers of residential property were the most active, increasing their purchases by about 64% to 5,630 units, up from 3,442 in February, Midland added.
With favourable property market measures in the budget at the end of February and the strong performance of Hong Kong stocks in recent months, new property sales have been outstanding,” said Midland’s chief analyst Buggle Lau Ka-fai. The bullish momentum is likely to be sustainable, with the forecast for deals in April to reach 7,040 lots, Ricacorp said. That would be the highest monthly transactions since the 7,695 lots in November, the agency said.
The revival in the city’s real estate industry comes after the budget in February slashed the stamp duty on homes worth up to HK$4 million to HK$100 from HK$60,000. The previous threshold was HK$3 million. “The easing of stamp duties for properties worth HK$4 million has led to many buyers chasing small residential units,” said Ricacorp’s head of research Derek Chan.
Philippines Producer Inflation Hits 21-Month High
Producer prices in the Philippines rose by 0.8% year-on-year in February, following a downwardly revised 0.7% increase in January. This marked the highest reading since May 2023. On a monthly basis, producer prices declined by 0.2% in February, following a 0.4% drop in January.
Philippines Manufacturing Dips For First Time Since 2023
The S&P Global Philippines Manufacturing PMI fell to 49.4 in March 2025 from 51.0 in February, marking the first contraction in 19 months and the sharpest decline since August 2021. The downturn was driven by a fresh drop in new orders, with firms reporting weaker foreign demand and increased competition. As a result, manufacturing output fell, ending an 11-month growth streak. Hiring activity stagnated, as firms cited sufficient manpower to meet business needs, while backlogs of work also declined after rising in February. On the pricing front, input costs and output charges rose modestly, though inflationary pressures remained below historical averages.
Malaysia Manufacturing Shrinks At Faster Pace
The S&P Global Malaysia manufacturing PMI declined to 48.8 in March, down from 49.7 in February, marking the tenth straight month of contraction in the sector. New orders returned to contraction, marking the steepest decline in a year. Concurrently, foreign sales moderated amid subdued demand due to the impact of escalating global trade uncertainty. On prices, input price inflation eased for the second consecutive month, reaching the lowest level in 2025. Output prices remained broadly unchanged.
Indonesia Manufacturing Growth Slows
The S&P Global Indonesia Manufacturing PMI fell to 52.4 in March from February's 11-month high of 53.6. Despite the dip, it was the fourth straight month of increase in factory activity. Growth in both output and new orders stayed strong, though their rates of rise eased slightly from the prior month. Employment growth hit a 3-month low. Foreign demand showed renewed strength, expanding for the third time in four months. On the cost front, input prices slowed, falling below average, while factory gate prices rose marginally.
India Manufacturing PMI Revised Higher
The HSBC India Manufacturing PMI was adjusted upward to 58.1 in March, surpassing the flash estimate of 57.6. This figure also exceeded February's reading of 56.3, representing the highest level since July 2024. Both new orders and output rose the most in eight months, and buying levels notched their highest level in seven months. Employment also rose solidly. However, foreign sales rose the least in 3 months, despite its growth rate remaining strong. Regarding prices, input cost inflation reached a 3-month high. However, prices charged rose the least in a year.
US Private Sector Job Growth Above Forecasts
Private businesses in the US added 155,00 workers to their payrolls in March, following an upwardly revised 84,000 in February, according to payrolls provider ADP. That was above expectations of 105,00. The services sector added 132,000 jobs, while the goods producing sector added 24,000 jobs, led by manufacturing (21,000). Meanwhile, year-over-year pay gains slowed to 4.6% for job-stayers and to 6.5% for job-changers. The pay premium for job-changers was 1.9 percentage points, matching a series low last seen in September. "Despite policy uncertainty and downbeat consumers, the bottom line is this: The March topline number was a good one for the economy and employers of all sizes, if not necessarily all sectors", according to Nela Richardson, Chief Economist, ADP.
Andreessen Horowitz In Talks To Buy Out TikTok’s Chinese Owners
The Financial Times is reporting that US venture capital giant Andreessen Horowitz is in talks to invest in social media platform TikTok as part of an effort led by Donald Trump to wrest control of the popular video app from its Chinese owners. The group, whose co-founder Marc Andreessen is a vocal supporter of the US president, is in talks to add new outside investment that will buy out TikTok’s Chinese investors. The talks come as part of a bid led by Oracle and other American investors to carve it out of its parent company ByteDance. Andreessen Horowitz was approached as TikTok’s advisers and the White House sought to add financial firepower to ongoing discussions. The firm was strongly considering making an investment, three people familiar with the discussions told the FT.
The Oracle-led bid recently emerged as the frontrunner ahead of a deadline on April 5, when a federal law would ban the app in the US unless its Beijing-based owner sells the American arm to non-Chinese entities. Marc Andreessen’s close ties to the Trump administration include helping recruit staff for Elon Musk’s US government cost-cutting unit, while former Andreessen Horowitz general partner Sriram Krishnan is serving as a White House adviser for artificial intelligence.
BYD Sales Soar
Vehicle sales at China’s BYD soared 58% in the first quarter. The Shenzhen-based group on Tuesday said it delivered 986,098 passenger vehicles in the first quarter, of which 416,388 were pure EVs, up 39%. The strong start to the year came after BYD’s latest annual sales figures recently topped US$100bn for the first time, propelled by resurgent demand for hybrid vehicles in its home market. BYD has also been making aggressive inroads into overseas markets.
Chinese Megabanks’ Interest Margins Fall To Record Low
A key profitability indicator at China’s biggest lenders has fallen to its lowest levels on record as a slowing economy and an official push to boost credit weigh on the country’s banking sector. China’s six largest banks by assets have all posted their lowest-ever net interest margins, the difference between what a bank pays on its deposits and earns on its loans, in recent days, according to an analysis by the Financial Times. The average margin across the six state-run lenders, including Bank of China and Industrial and Commercial Bank of China, the world’s biggest by assets, was 1.48% at the end of last year, compared with 1.6% the previous year. The last time it was above 2% was in 2021.
The decline reflects growing pressure on China’s state-run banks as authorities struggle to stimulate an economy hit by a prolonged property slump and weak consumer confidence. “Before 2022 you had a pretty normal net interest margin decline for an economy that’s starting to slow,” said Jason Bedford, a former UBS banks analyst. But the latest contraction has been driven by government cuts to mortgage rates, a jump in term deposits by savers and repricing of loans to small and medium-sized businesses, he added. These policies have led banks to earn less on loans relative to what they pay savers.
Over the weekend, four of the six banks said they will raise a combined Rmb520bn (US$72bn) through share sales to investors including the Ministry of Finance. The Ministry of Finance will be a major investor in the capital raise by the four banks, which collectively had about Rmb10tn in capital as of last June. The rare government-directed injections will increase the banks’ core tier one capital, a gauge of equity that regulators use to limit leverage and are part of a series of official support measures that have since last September aimed to restore confidence in the world’s second-largest economy.
Japan’s Rapidus Hopes To Make Japan a Global Chip Powerhouse
Japan’s state-backed venture Rapidus is getting ready for test production of advanced semiconductors by the end of the month. The two-year-old company is gearing up to mass produce chips using 2-nanometer processes in 2027, which on paper would match Taiwan Semiconductor Manufacturing Co.’s prowess. Japan is preparing as much as ¥802.5 billion (US$5.4bn) of additional aid for the startup, which brings the total amount of money earmarked to about US$11.5 billion.
The startup is part of a broader push around chips. The country hopes to reestablish itself as a prime location for manufacturing legacy chips while restoring its place as a leader in silicon technology. It’s also a response to concerns about technological reliance on Taiwan. TSMC has already opened one plant in Japan with a second on the way. But Rapidus, which aims to cater to a premium niche market, is a different kind of bet on breaking into a cutthroat market.
US App Stores Host VPNs Linked To Sanctioned Chinese Firm
Apple’s and Google’s mobile stores have been hosting several popular “private browsing” apps operated by a company connected to a Chinese cyber security firm blacklisted by the US government. At least five free virtual private networks (VPNs) available through the US tech groups’ app stores have links to Shanghai-listed Qihoo 360, according to a new report by research group Tech Transparency Project, as well as additional findings by the Financial Times.
Qihoo, formally known as 360 Security Technology, was hit with sanctions by the US in 2020 for alleged Chinese military links. The US Department of Defense later added Qihoo to a list of Chinese military-affiliated companies. TTP’s report, which also found 20 of the 100 most downloaded apps on Apple’s App Store have Chinese owners, warns “millions of Americans are inadvertently sending their internet traffic to Chinese companies”. The revelations come in a climate of rising concerns in the US about Chinese tech companies and the national security risks they may pose.
Asia Pacific Markets Subdued Ahead Of Tariffs
Asia-Pacific markets were mixed Wednesday ahead of an announcement from Donald Trump about fresh tariffs. Japan’s Nikkei 225 traded around the flatline before settling 0.3% higher at 35,728. At the low of the day, it fell 0.6% to its weakest level since September. South Korea’s Kospi slipped 0.6%. Australia’s S&P/ASX 200 traded 0.1% higher.
Shares of Japan and Korean automakers were weak. Nissan, which has three plants in Mexico, declined as much as 3.7% before rebounding. South Korea’s Kia Motors, which has a manufacturing plant in Mexico, slipped 1.2%.
In India, the BSE Sensex rose 0.8% to 76,617 after Donald Trump said Tuesday that India was willing to cut tariffs, hinting at possible relief for India from sweeping US tariffs. In the previous session, the Sensex fell 1.8%, the most in over a month. India’s 10-year benchmark government bond yield slid to its lowest level since January 2022, hitting 6.51%. “Foreign funds are getting confident of rupee stability as well as India’s macroeconomic stability,” said Anuj Tagra, vice president and portfolio manager of Franklin Templeton’s India Fixed Income team. “Market expectations of RBI’s push to focus on growth through rate cuts and infusion of liquidity into the system has brought back attractiveness of debt as an asset class with the foreign investors.”
Chinese Markets Trade Cautiously
Chinese markets saw little movement ahead of the tariff announcement. Mainland China’s CSI 300 closed 0.1% lower at 3,884. In Hong Kong, the Hang Seng fell 4 points, to end the day at 23,203. The Tech Index was 0.4% higher.
Xiaomi shares extended their decline after Tuesday’s 5.5% selloff, tumbling another 4.2% by the close. The stock is down 23.5% from a record high in March. The decline came after Xiaomi confirmed one of its electric vehicles was involved in a deadly accident in China, and investors are waiting for the conclusions of the police probe.
Hong Kong Considers New OTC Stock Market For Delisted Companies
Hong Kong is drafting rules for an over-the-counter market for delisted shares to give investors at risk of owning a growing pile of nearly worthless securities a chance of recouping some losses. The city’s stock exchange and regulator are working on a blueprint for what is commonly referred to as a pink sheet market after an initial consultation with market participants, according to Bloomberg News. The market, still in its early stages, would provide an exit for investors looking to sell, but not allow new funds to be raised, and would be designed as an "end-of-life care" platform. The OTC market would allow retail investors to participate, involve market makers to match orders, and would not allow new listings or a path back to the main bourse.
China Government To Sell Its First Sovereign Green Bond
China is issuing its first-ever green sovereign bond, aiming to raise up to 6 billion yuan (US$825mn), with plans to list it in London. The bond's initial price guidances are set at yields of 2.3% and 2.35% for the three-year and five-year offshore yuan-denominated notes. China's green bond issuance comes as part of its efforts to build closer financial ties with the UK and tap into the European market, with Chinese entities being the largest issuers of green bonds this year.
John Wang, VP and Senior Analyst at Moody’s Ratings, said, “China’s maiden sovereign green bond issuance underscores the government’s continued focus on decarbonization and green investment. The move will encourage more Chinese entities to seek funding in the international sustainable finance market, which will diversify their funding sources as they transition to low-carbon practices. In addition, the issuance will reinforce China’s leadership in green finance and complement its other sustainable finance initiatives, such as the recent expansion of the national emissions trading scheme.”
European Stock Markets Close Lower
European markets closed lower Wednesday as traders braced themselves for a raft of fresh trade tariffs. After rebounding Tuesday, the regional Stoxx 600 index was back in the red Wednesday, down 0.5% by the close. Most sectors notched declines, though retail and utilities stocks posted slight gains. London’s FTSE 100 fell 0.3%.
The Stoxx 600 healthcare index dropped nearly 2%, as hopes fade for any exemption from duties for the pharmaceutical sector. German pharma and biotech group Bayer was among the worst performers, down 5.3%.
US Stock Index Futures Plunge In After-Hours Trading
US stocks jumped in regular trading on Wednesday, closing out three consecutive sessions of gains as investors prepared for Donald Trump to announce new tariffs on what he has labelled “liberation day”. All three major indices reversed losses from earlier in the day. The S&P 500 ticked up 0.7% to 5,671. Earlier in the session, the broad market index was more than 1% lower. The Dow added 235 points, or 0.6%, to end at 42,225. The Nasdaq Composite added 0.9%, closing out the session at 17,601.
Shares of Tesla climbed 5.3%, similarly turning around from earlier on news that President Donald Trump has signalled to his cabinet that Elon Musk will be stepping back from his advisory role in the coming weeks. Tesla’s vehicle sales fell 13% in the first quarter, dragged down by the changeover of its most important model and international backlash against Elon Musk. The automaker said Wednesday it delivered 336,681 vehicles in the first three months of the year, the lowest since the second quarter of 2022. Analysts on average were expecting the company to sell more than 390,000 cars and trucks.
US stock index futures fell sharply in after-hours trading as Donald Trump unveiled sweeping tariffs of a minimum 10%, but even higher for some countries. Dow Jones Industrial Average futures lost 1143 points, or 2.7%. S&P 500 futures dropped 3.9%. Nasdaq-100 futures lost 4.7%. Shares of hard-hit stocks over the past month as tariff fears swirled continued falling in after-hours trading Wednesday evening. Tesla was down about 5%.
Apple and Nvidia shares dropped in after-hours trading as Trump announced he will impose a 32% tariff on Taiwan and a 34% tariff on China. Apple shares were down about 8%, while Nvidia shares were down 4%. The two companies, along with other large US tech groups, are heavily dependent on Taiwan Semiconductor Manufacturing Company, which produces most of the world’s most advanced semiconductors. Apple ships roughly 50mn iPhones to the US each year, with the vast majority made in China.
Amazon shares fell 6%in after-hours trading, with tariffs imposed on China expected to hit the e-commerce giant. Analysts at Morgan Stanley estimate that around 25% of the company’s cost of revenue is directly exposed to China.
Treasury Yields Volatile
Government bonds came under pressure as equities advanced. The yield on the policy-sensitive two-year Treasury was up 5 bps to 3.91%. The benchmark 10-year yield added 2 bps to 4.18%. Following the tariff announcements, yields rose further. The two-year Treasury yield jumped another 3 bps to 3.94%, while the 10-year yield climbed an additional 4 bps to 4.22%. However, yields then plunged with the 2-year dropping to 3.84% and the 10-year yield falling to 4.13%.
Dollar Extends Losses After Tariff Announcement
The US Dollar Index extended earlier losses to trade 0.7% lower against a basket of six currencies. The Japanese yen rose 0.2% to ¥149.32 per dollar. Goldman Sachs expects the yen to climb to the low 140 levels against the dollar this year. The yen is seen as a good hedge against a potential US recession, with a move to 140 implying a 7% gain from current levels. Goldman's forecast is more bullish than the year-end median estimate of 145 in a Bloomberg survey of analysts. The offshore Chinese yuan fell 0.2% to Rmb 7.2958 after reciprocal tariffs of 34% were imposed on China.
Gold Trades Near Record
Gold traded just short of its recent record on Wednesday. Spot gold traded 0.5% higher at $3,133 an ounce, after peaking at $3,149 on Tuesday. Bullion has been one of the strongest performing commodities this year, rallying 19% in the opening three months to post its best quarter since 1986.
Oil Plunges After Tariff Announcement
Brent crude oil futures plunged 1.5% to $73.34 a barrel after the tariff announcement. Brent crude prices had climbed back to around $74 amid growing geopolitical concerns tied to potential US actions that may impact oil exports from Venezuela and Iran. The selloff resumed amid rising fears of US tariffs, Citi’s analysts wrote. “While US President Donald Trump’s approach to tariffs has been somewhat erratic, effective tariff rates are rising globally, raising concerns for the health of the global economy and, consequently, the demand for oil,” said BMI analysts.
Bitcoin Falls Below $85,000 After Tariff Announcement
The price of bitcoin sharply fell after Donald Trump announced tariffs on US trading partners. The world’s largest cryptocurrency jumped to nearly $88,000 in the run-up to his speech, but its price fell below $85,000 after the conclusion of Trump’s speech outside the White House on Wednesday afternoon. Bitcoin is down about 10% year-to-date.
Peter Lewis’ Money Talk Podcast
On Thursday’s “Peter Lewis’ Money Talk” podcast, I’ll be joined by Andrew Freris, the CEO of Ecognosis Advisory, and John Schofield, Managing Director of Tempus Investments. With a view from Taiwan is Ross Feingold, Director of Research, Caerus Consulting, Taipei.
The podcast is also available on Apple Podcasts, YouTube Studio and Spotify.
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https://www.youtube.com/playlist?list=PLnwqOJD9ie5gHH29bNfuG1Nscy8rdJo6O
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This podcast is sponsored by Surfin Group, which is headquartered in Singapore and offers online financial services to 60 million customers across 10 countries. You can find out more about them by going to their website www.surfin.sg
