Stocks in Asia fell on Thursday, reversing early gains, as concerns about the economic impact of President Donald Trump’s trade policies overshadowed optimism from a tepid U.S. inflation reading. Meanwhile, gold surged, coming within $10 of its record peak, and the safe-haven yen strengthened. U.S. Treasury yields dipped, and crude oil prices also experienced a decline.
Asian Markets Drop
Hong Kong’s Hang Seng index dropped 1.4% by 0545 GMT, while mainland Chinese blue-chip stocks slid by 0.7%. Japan’s Nikkei index, which had gained as much as 1.4%, ultimately ended the day flat. Taiwanese equities fell by 1.1%, and South Korea’s KOSPI lost 0.4%. Australia’s stock benchmark also closed down 0.5%, marking a 10% decline from its record high in February, indicating a technical correction.
U.S. Markets Expected to Open Lower
Futures suggested a lower open for Wall Street, with S&P 500 futures falling by 0.5% and Nasdaq futures down 0.8%. Pan-European STOXX 50 futures also slipped by 0.5%. Despite a brief rebound on Wall Street on Wednesday, led by beaten-down U.S. tech stocks, the economic uncertainty tied to tariff policies weighed on overall sentiment.
U.S. Inflation Figures and Tariff Impact
The U.S. inflation data showed consumer prices rose at the slowest pace since October, offering some relief. However, the figures did not fully reflect the impact of President Trump’s escalating tariff campaign, which is seen as an obstacle to economic stability.
Michael Brown, senior research strategist at Pepperstone, noted that despite the brief optimism, the market could not hold onto its gains. “This, though, still strikes me as a market that simply cannot hold onto any gains at the moment, which should be a big old red flag for any potential dip buyers out there,” he said. His bearish outlook on equities was paired with a bullish stance on bonds, particularly as risks for the U.S. economy increasingly tilted downward.
Tariff Tensions Escalate
The tariffs on U.S. steel and aluminum imports, which were implemented on Wednesday, are part of a broader strategy to reshape global trade in favor of the U.S. This move prompted swift retaliation from both Canada and Europe, and analysts warned that further tariffs could exacerbate the economic uncertainty. TD Securities analysts suggested that the full impact of these measures was still to come, particularly as more trade policy developments loom.
Gold and the Yen Shine
In the midst of these market challenges, gold rose by 0.5%, reaching as high as $2,947.06, closing in on the record high of $2,956.15 from February. Gold’s rise underscores its status as a safe-haven asset amid growing market uncertainty.
Meanwhile, the yen strengthened by about 0.4%, trading at 147.70 per dollar, as investors sought safer assets. The euro lost 0.1%, falling to $1.0879.
Oil Prices Retreat
After a rally on Wednesday, crude oil prices pulled back. Brent crude futures fell 0.3%, settling at $70.77 per barrel, while U.S. West Texas Intermediate crude declined by 0.4% to $67.44 per barrel.
Overall, the market’s nervousness about trade policies, coupled with fluctuating inflation data, has created a volatile environment. While gold and the yen gained, the broader outlook for equities remains uncertain as the impacts of tariffs continue to unfold.
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