Shares in Asia rebounded after suffering a significant loss, with Japan leading the way due to expectations of being prioritized in US trade discussions. Treasuries saw an increase after experiencing a steep decline the previous day.
Market indicators in Japan climbed over 6%, as did futures contracts in the US and Europe. Stocks in Hong Kong and China also rose thanks to government-related funds purchasing assets and the central bank offering loans to stabilize the market. Oil prices went up, and gold saw its first increase in four days. The dollar weakened against major currencies.
Global equities lost $10 trillion following the US announcing extensive tariffs last week, leading to heightened volatility. Amid concerns of a worldwide recession and escalating trade tensions, investors are eagerly seeking relief. President Donald Trump has threatened to impose an additional 50% tariff on China while hinting at potential negotiations.
Tim Waterer, chief market analyst at KCM Trade, expressed caution, stating that it is premature to assume a turnaround, especially with the looming threat of more tariffs on China from Trump. Given the complexities involved, including the risk of a recession and the US adopting a tough stance on tariffs, uncertainties persist in the market.
Japanese stocks surged after Trump appointed two cabinet members to initiate trade talks with Japan following a conversation with Prime Minister Shigeru Ishiba. Japan seems likely to receive priority treatment compared to other US trading partners in tariff negotiations, positioning Tokyo at the forefront of countries seeking tariff reductions.
On Monday, Trump made various statements about imposing duties on global trading partners. However, he provided little clarity on what would be required to lower tariff rates or if relief would be considered at all.
Peter S. Kim, investment strategist at KB Securities, noted the lack of progress in understanding the direction of trade negotiations, highlighting investor surprise at the extent of the trade war and its weaponization.
China criticized the US on Tuesday for threatening tariff hikes and vowed to retaliate if Washington followed through.