Asian Stocks Mostly Down After Trump Announces Tariffs
Asian stocks were mostly down on Tuesday, following the announcement by U.S. President Donald Trump of 25% tariffs on all U.S. imports of steel and aluminum.
Hong Kong's Hang Seng index declined 0.62%, while the Shanghai Composite dipped 0.16%. Japan markets were closed for a national holiday. Australia's S&P/ASX 200 remained largely unchanged, while South Korea's KOSPI was up 0.41%.
Trump's announcement has sparked fears of a trade war, leading to volatility in the markets. The price of gold, often seen as a safe haven asset, climbed to a record high on Monday.
However, Trump has shown a willingness to back down from threats in the past, suggesting that the tariffs may be a negotiating tactic rather than a long-term policy.
In China, Trump has already imposed 10% tariffs on Chinese goods, prompting retaliation from China in the form of tariffs on U.S. coal, liquefied natural gas, crude oil, and other products.
Analysts believe that US-China trade tensions are likely to escalate, even if a negotiated compromise is the ultimate goal.
The S&P 500 rose on Monday, while the Dow Jones Industrial Average and the Nasdaq composite also gained ground.
In the bond market, the yield on the 10-year Treasury held steady, while the yield on the two-year Treasury fell slightly.
The Fed cut its main interest rate several times in 2024, but traders are now less confident about further reductions in 2025 due to concerns about inflation.
Fed Chair Jerome Powell will be offering testimony before Congress later this week, where he could provide more insights into the Fed's thinking.
In energy trading, benchmark U.S. crude added 16 cents to $72.48 a barrel, while Brent crude rose 21 cents to $76.08 a barrel.
The U.S. dollar remained largely unchanged against the Japanese yen, while the euro also remained stable.