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What’s happening: Asia-Pacific stock markets closed higher on Tuesday following the latest tariff-related announcements by US President Donald Trump.
What happened: Although Trump announced tariffs on 14 trading partners, he extended the deadline for the grace period.
Some upbeat economic reports also provided support to Asian stock markets.
Why it matters: Markets in Asia closed Tuesday’s session on an upbeat note despite concerns around US trade policies. President Donald Trump announced fresh tariff rates on 14 countries, with a 25% tariff on Japanese products. Despite the new rate being lower than the previous threat of 35%, it remains higher than the 10% tariff imposed on most nations.
Japan’s Prime Minister Shigeru Ishiba said that Tokyo will continue trading talks with the US in an attempt to reach a mutually beneficial deal.
Trump also signed an order to extend the reciprocal tariff deadline from July 9 to August 1, which would allow more time for trade-related negotiations. This gave hope of bilateral agreements being reached before the new deadline.
Japan’s current account surplus topped expectations, lending support to the overall market sentiment. Japan’s current account surplus widened to ¥3,436.4 billion in May, from ¥2,949.5 billion in the year-ago period, topping market estimates of ¥2,940 billion. Meanwhile, Japan’s services sector gauge rose to 45.0 in June, from 44.4 in the previous month. This, too, came in better than projections of 45.2. Japan’s Nikkei 225 gained 0.26% to close at 39,688.81 on Tuesday.
India, which is also in trade talks with the US, said it had submitted its final offer. India’s BSE Sensex rose 0.32% to settle at 83,712.51.
Australia’s NAB Business Confidence Index climbed to 5 in June, from 2 in the previous month, recording an improvement for the third month in a row and representing the highest reading since January. The Reserve Bank of Australia kept its cash rate unchanged at 3.85% at its latest meeting, compared to market expectations of a 25bps cut. The S&P/ASX 200 rose 0.02% to close at 8,590.70.
Hong Kong’s Hang Seng Index jumped 1.09% to 24,148.07, while China’s SSE Composite Index rose 0.70% to close at 3,497.48 on Tuesday.
What to watch: Investors will continue monitoring tariff-related news, which are expected to significantly impact Asian markets ahead.
Data on PPI and foreign bond investment from Japan, due to be released on Thursday, will also remain in focus. Producer prices in Japan, which rose 3.2% year-over-year in May following a 4.1% gain in April, are expected to rise by 2.9% in June.
Context: The US dollar edged higher this morning after President Donald Trump announced fresh tariff rates on 14 countries.
Details: Trump issued the first of various planned tariff warning letters to countries, with rates between 25% and 40%. The latest list of nations includes major exporters like Japan and South Korea.
Trump also announced plans to extend the tariff deadline to August 1 from July 9, allowing more time to reach agreements.
Data released Tuesday showed US consumer inflation expectations for the year ahead fell to 3% in June, from 3.2% in the previous month, logging the lowest level in five months. The NFIB Small Business Optimism Index slipped to 98.6 in June, from 98.8 in May. Although the latest reading came in below market expectations of 98.7, it remained slightly higher than the 51-year average of 98.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged higher to 97.53 this morning.
The EUR/USD pair gained slightly to 1.1727 this morning, while the GBP/USD forex pair slipped around 0.1% to 1.3585.
What to watch: Investors await the release of economic data on MBA mortgage applications (1500 UAE Time) and wholesale inventories (1800 UAE Time) from the US today. Analysts expect US wholesale inventories to decline 0.3% to $905.4 billion in May, following a 0.1% gain in the previous month.
The release of minutes of FOMC’s meeting (2200 UAE Time) will also remain in focus today.
Other Markets: European indices closed higher on Tuesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.54%, 0.55%, 0.56% and 0.41%, respectively.
US President Donald Trump announced plans to send more defensive weapons to Ukraine to help defend against Russia’s intensifying offensive. However, the RUB/USD pair rose in forex trading this morning.
Argentina’s industrial production climbed 5.8% year-over-year in May, following an 8.5% gain in April. The region’s industrial output expanding for the sixth straight month lent support to the ARS/USD forex pair.
Canada’s Ivey Purchasing Managers Index improved to 53.3 in June, from 48.9 in the previous month. Despite this the CAD/USD pair moved lower in forex trading this morning.
Chile’s annual inflation rate slowed to 4.1% in June, versus 4.4% in the previous month. However, the inflation rate remaining higher than the central bank’s 2%-4% target range exerted pressure on the CLP/USD forex pair.
US crude oil inventories jumped by 7.1 million barrels in the week ending July 4, compared to a gain of 680,000 million barrels in the previous week, which sent WTI crude oil prices lower this morning.
UK’s Treasury Gilt 2035 auction (1300 UAE Time) and Bank of England financial stability report (1330 UAE Time), Germany’s 15-year Bund auction (1330 UAE Time), US EIA crude oil stocks (1830 UAE Time), EIA gasoline stocks (1830 UAE Time), EIA Cushing crude oil stocks (1830 UAE Time), EIA distillate stocks (1830 UAE Time), 17-week Bill auction (1930 UAE Time) and 10-year Note auction (2100 UAE Time), India’s M3 money supply (1530 UAE Time), as well as Mexico’s inflation rate (1600 UAE Time).
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