Asian markets were mixed on Tuesday as traders kept a nervous eye on Donald Trump’s next moves after he signed off on 25% tariffs for steel and aluminium imports, having warned of more measures to come.
The president has lived up to his campaign pledges to resume his hardball trade diplomacy to extract concessions on a range of issues, including commerce, immigration and drug trafficking.
Global stocks rallied on Monday but Asian markets struggled to maintain momentum a day later, with Hong Kong flitting between gains and losses, while Shanghai and Singapore fell. Markets in Seoul, Sydney and Taipei rose.
The uncertainty fuelled by Trump’s moves has pushed safe-haven gold to record highs. On Monday, it broke above $2,900 for the first time. It extended gains on Tuesday to hit a new peak above $2,938.
“This is still very early days,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. “The market’s just sort of chopping around rather than really directional right now.”
Equities have held up since Trump took office – London and Frankfurt even hit record highs on Monday – with analysts saying measures had so far been less severe than feared.
Still, caution looms over trading floors as dealers brace for the next announcement out of the White House, with Maurice Obstfeld, senior fellow at the Peterson Institute for International Economics, saying: “The degree of uncertainty about trade policy has basically exploded.”
And Charu Chanana, chief investment strategist at Saxo Markets, said: “These expanding trade actions beyond previous threats to Canada, Mexico and China are leading to potential new import restrictions and retaliation, signalling more bouts of volatility for investors.
“Tariffs are being used not just to tax imports but also as tools for national security, economic leverage and revenue generation, indicating a shift towards long-term economic policy rather than short-term trade disputes.”
Fears that Trump’s tariffs, along with tax cuts and deregulation, will reignite inflation and force the Federal Reserve to keep interest rates elevated have sent the dollar up against most of its peers.
Readings on consumer and producer price indexes this week will provide a fresh snapshot of inflation, while Fed boss Jerome Powell is also due to give depositions to US lawmakers.
Both will be pored over for an idea about the bank’s plans for rates, with forecasts for two cuts at most this year.
Agence France-Presse and Reuters contributed to this report
