Asian shares fell Friday, mirroring US equities, as concerns about the upcoming ‘reciprocal tariffs’ and a widening trade war overshadowed data showing that the US economy grew faster than estimated.
A regional gauge of equities fell 0.7% with indexes in Japan, Australia and South Korea declining after both the S&P 500 and Nasdaq 100 slipped, with automakers getting hit. Equity-index futures for US also fell in early Asian trading. Gold edged higher after hitting a new record in the prior session. Yields on the 10-year Treasury were little changed.
Markets were cautious ahead of President Donald Trump’s promise of announcing reciprocal tariffs on April 2, after slapping a 25% tariffs on imports of all automobiles into the country. Following data showing the US economy picked up pace in the fourth quarter, investors will now get another chance to gauge economic health on Friday when US personal consumption expenditures price index, or PCE, is unveiled.
“Stocks remain on the back foot as the latest tariff measures are digested and market participants nervously await next week’s announcement of reciprocal tariffs and tonight’s PCE Index data,” wrote Kyle Rodda, a senior market analyst at Capital.com. “The data tonight takes on greater importance because of the Trump administration’s trade policy.”
In Japan, inflation in Tokyo accelerated, keeping the Bank of Japan on track for gradual interest rate hikes.
Just days before the end of a quarter that’s set to be the worst for the S&P 500 since 2023, investors will turn their focus to Friday’s US PCE data. The Federal Reserve’s preferred measure of underlying inflation is forecast to show signs of stickiness as prices remain at a disquieting level for officials.“Investors will want to see in-line or better inflation results and a strong employment number to gain some reassurance,” said Bret Kenwell at eToro.The 30-year US yield exceeded its five-year equivalent by the widest gap since early 2022, with shorter-maturity bonds more impacted by the prospect of potential Federal Reserve interest-rate cuts should US growth slow. The net result in the bond market is a so-called steeper curve.
Long-maturity Treasury yields reached the highest levels in a month Thursday as investors demanded compensation for the risk that tariffs will spur US inflation. Fed Bank of Boston President Susan Collins said tariffs will likely cause price pressures in the near term, but it was unclear how long that would last.
In Asia, a senior Chinese leader on Thursday called for increased global cooperation, in a thinly veiled critique aimed at the US for destabilizing trade and geopolitical relations. Facing external headwinds, policymakers have made boosting domestic demand the top economic priority this year.
“No matter how the external environment changes, China will open wider to the world,” Ding Xuexiang, the ruling Communist Party’s sixth-ranking official, said during his keynote speech at the annual Boao Forum.
Trade authorities from South Korea and Japan are set to meet with their Chinese counterparts in Seoul this weekend to discuss economic cooperation as they seek ways to respond to increasing trade pressure from the US, according to a media report.
Elsewhere, Australia’s government will hold its national election on May 3, kicking off what’s expected to be a closely-fought campaign centered on cost-of-living pressures and a housing crisis in a sluggish economy.
In commodities, oil edged higher on potential supply disruption from producers including Iran and Venezuela. West Texas Intermediate advanced 0.4% to settle just below $70 a barrel, continuing a three-week rally.