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What’s happening: Asian stocks recorded gains this morning, as investors continued to assess US President Donald Trump’s tariff moves.
What happened: Japan’s equity markets led the gains, after Trump said he is considering a pause in the 25% auto tariffs.
However, the gains were limited as the US Commerce Department announced plans to investigate semiconductor and pharmaceutical imports.
Why it matters: US President Donald Trump has imposed 145% tariffs for China and 10% for most of its trading partners, resulting in significant volatility in the financial markets.
However, the latest announcement related to a pause in tariffs lent some support to sentiment. The White House announced an exemption on smartphones and computers, while Trump said that tariffs could be imposed at a later date.
The US President said that he would announce the decision on semiconductors next week and on smartphones soon after that. He added that his administration is exploring a pause in auto tariffs.
Auto-related stocks led the rally in Japan, with shares of Suzuki Motor, Honda Motor and Toyota Motor recording sharp gains. Financials, industrials and consumer-related stocks also notched gains during the session.
Data released on Monday showed that Japan’s industrial production grew by 2.3% in February, representing a slowdown from the 2.5% recorded in the previous month. However, investor responded positively as this marked another recovery after three straight months of declines.
China’s trade surplus widened to $102.64 billion in March, from $58.65 billion in the year-ago period, topping market estimates of $77 billion. The sharp rise was driven by a 12.4% year-over-year jump in exports, exceeding market expectations of a 4.4% rise.
Japan’s Nikkei 225 surged around 1.2% to 34,385.44 this morning, gaining for the second session in a row. Hong Kong’s Hang Seng Index climbed about 0.3%. However, China’s markets bucked the overall market trend, with Shanghai Composite Index shedding 0.36% to reach 3,251.13.
What to watch: Investors will continue monitoring tariff-related announcements from the US. Investors will also watch the upcoming trade talks between the US and Japan, which are projected to provide direction to the market.
China’s President Xi Jinping’s first overseas trip of the year will also remain in focus, as he landed in Vietnam on Monday. Xi Jinping is also scheduled to visit Malaysia and Cambodia.
Context: The EUR/USD forex pair moved lower this morning amid strength in the US dollar index.
Details: US President Donald Trump announced a 90-day pause on tariffs for most countries. The European Union also announced a temporary suspension on its retaliatory tariffs for 90 days, in a bid to foster negotiations.
President Trump also announced a temporary pause on reciprocal tariffs for tech and consumer electronics, but said levies would be imposed and details on the rates will be announced soon.
Meanwhile, the European Central Bank is scheduled to announce its monetary-policy decision on Thursday. Markets are pricing in a rate cut of 25 basis points.
Strength in the US dollar exerted pressure on the EUR/USD pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.3% to 99.91.
The EUR/USD forex pair fell around 0.2% to 1.1328, while the EUR/GBP pair slipped 0.1% to 0.8595.
What to watch: Investors await the release of economic data on the Eurozone’s industrial production (1300 UAE Time) and the ZEW economic sentiment index (1300 UAE Time) today. Eurozone’s industrial output, which rose by 0.8% in January, is expected to grow by 0.2% in February. The ZEW Indicator of economic sentiment for the Eurozone, which increased by 15.6 point from the previous month to 39.8 in March, is expected to decline to a reading of 14.2 in April.
Other Markets: US trading indices closed higher on Monday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.78%, 0.79% and 0.57%, respectively.
UK’s Prime Minister Keir Starmer, France’s President Emmanuel Macron and Italy’s Prime Minister Giorgia Meloni condemned Russia’s deadly attack on Sumy. The news sent the RUB/USD pair lower in forex trading this morning.
Canada’s wholesale sales grew by 0.3% to $85.7 billion in February, compared to a preliminary reading of 0.4%, exerting pressure on the CAD/USD forex pair.
Turkey’s current account deficit widened to $4.4 billion in February, from $3.3 billion in the year-ago month, sending the TRY/USD pair lower in forex trading this morning.
Switzerland’s producer and import prices fell by 0.1% year-over-year in March, declining at the same pace versus the previous month, which exerted pressure on the CHF/USD forex pair.
UK’s retail sales grew by 0.9% on a like-for-like basis in March, topping market estimates of a 0.5% gain. However, the GBP/USD pair fell in forex trading this morning.
Germany’s ZEW economic sentiment index (1300 UAE Time) and ZEW current conditions (1300 UAE Time), South Africa’s gold production (1330 UAE Time), mining production (1330 UAE Time) and SARB monetary policy review (1830 UAE Time), India’s inflation rate (1430 UAE Time), Canada’s housing starts (1615 UAE Time), inflation rate (1630 UAE Time) and manufacturing sales (1630 UAE Time), as well as US export prices (1630 UAE Time), import prices (1630 UAE Time), NY Empire State manufacturing index (1630 UAE Time) and Redbook index (1655 UAE Time).
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