Stocks in Asia escalate, bucking the silence on Wall Street, amidst escalated negotiations on tariffs.
Rewritten Article:
Market momentum carried into Tuesday with Asian stocks seeing gains amid a quiet finish in U.S. stocks ahead of an action-packed week. Key corporate earnings and economic data releases could pave the way for further volatility.
Futures nudged higher, while oil prices dipped, with Tokyo's markets closed for a holiday.
Hong Kong's Hang Seng hovered nearly unchanged at 21,969.67, while the Shanghai Composite index edged lower by 0.1%, settling at 3,285.68. In South Korea, the Kospi soared by 0.7% to 2,565.42, with Australia's S&P/ASX 200 also rising by 0.9%, to 8,070.60.
Taiwan's Taiex and India's Sensex picked up gains of 1% and less than 0.1%, respectively.
A temporary lull in trading has provided a break from the rollercoaster rides that have roiled markets for weeks, as hopes ebbed and flowed around the possibility of Donald Trump backing down from his trade war.
The Trump administration seems to have made little headway in finding a resolution with China, with both sides insisting the other must take the first steps. Treasury Secretary Janet Yellen suggested that China yearns for a "de-escalation" in the trade war.
Trump has set into motion tariff hikes on Chinese exports that cumulatively amount to 145%, sparking responses from China that include import duties on U.S. goods of up to 125%. Some items have been exempted, though.
Many investors fear that Trump's tariffs could lead to a recession if left unchanged. Prior to Monday, the S&P 500 had nearly half its drop that had plunged it nearly 20% below its record set earlier in the year.
On Monday, the S&P 500 inched up by 0.1%, to 5,528.75, closing a fifth consecutive winning day. The Dow Jones Industrial Average climbed 0.3% to 40,227.59, and the Nasdaq composite pulled back 0.1% to 17,366.13.
TECH's mixed trading ahead of their earnings reports this week saw the S&P 500 waver between minimal gains and losses for much of the Monday session. Amazon shed 0.7%, Microsoft slipped 0.2%, Meta Platforms inched up 0.4%, and Apple climbed 0.4%.
Beyond the tech sector, insights from Caterpillar, Exxon Mobil, and McDonald's executives this week could shed light on the overall economic climate. Numerous companies across industries have already downsized their profit projections or withdrawn their estimates entirely due to uncertainty about what will occur with Trump's tariffs.
The fear is that Trump's to-ing-and-froing tariffs could be prompting households and businesses to alter their spending habits and defer long-term investments, as conditions shift quickly, seemingly by the hour.
So far, economic indicators suggest the U.S. economy is expanding, although at a more subdued pace. Analysts expect a Wednesday report to unveil U.S. economic growth slowed to a 0.8% annual rate in the first three months of the year, dropping from a 2.4% rate at the end of 2024.
Most reports have focused on data from prior to Trump's "Liberation Day" on April 2, when he declared tariffs that might impact imports globally. This raises the stakes for upcoming employment reports, including Friday's, which will show how many positions employers added during all of April.
Economists project it will show a deceleration in hiring to 125,000 from 228,000 in March.
The most notable economic data to date has originated from consumer surveys that reveal increased pessimism among U.S. consumers about the economy's future due to tariffs. The Conference Board's latest reading on consumer confidence will be released on Tuesday.
Bond market activity saw continued yield decline. Treasury yields have been trending downwards since an unexpected increase in yields earlier this month raised concerns among Wall Street and the U.S. government. This rise suggested that investors worldwide might be losing faith in the U.S. bond market as a safe haven for cash.
The yield on the 10-year Treasury stood steady at 4.21% early Tuesday.
In other developments, benchmark U.S. crude oil fell by 54 cents to $61.51 per barrel, and Brent crude retreated by 51 cents to $64.28 per barrel.
The U.S. dollar purchased 142.49 Japanese yen, rising from 142.02 yen, and the euro slipped to $1.1387 from $1.1422.
Key Insights:
- Earnings Outlook: For Q1 2025, analysts forecast a 7.2% year-over-year earnings increase for S&P 500 companies[4], while FactSet also estimates a 9.7% earnings growth for CY 2025[2], signaling faith in full-year profitability.
- Company-Specific Forecasts: Caterpillar projects a 23.21% decline in EPS ($4.30) for Q1 2025[1], while ADP eyes a 2.78% rise ($2.96 EPS)[1].
- Market Sentiment: The balance between solid earnings and trade-related risks dictates the market's recent stability[3][5], with ongoing layoffs and cost-cutting highlighting corporate caution[5].
- The tech sector is preparing for their earnings reports this week, with companies like Amazon, Microsoft, Meta Platforms, and Apple trading mixed.
- Investors around the world are closely watching the ongoing trade tensions between the U.S. and China, with tariffs imposing a significant impact on businesses.
- One of the key Asian markets, Japan, remained closed for a holiday on Tuesday, while Hong Kong's Hang Seng hovered nearly unchanged.
- The impact of tariffs is not restricted to the U.S., with South Korea's Kospi, Taiwan's Taiex, and India's Sensex also experiencing volatility.
- The Trump administration's tariff hikes on Chinese exports have sparked responses, including Chinese import duties on U.S. goods of up to 125%.
- The fear of prolonged tariffs leading to a recession has led multiple companies to downsize their profit projections or withdraw their estimates entirely.
- Amidst the uncertainties, analysts expect a slight slowdown in the U.S. economic growth rate for the first quarter of 2025.
- The ongoing trade tensions have led to increased pessimism among U.S. consumers, as reflected in consumer surveys, with a new reading on consumer confidence expected to be released on Tuesday.
