Asian stocks followed US equities lower as continual shifts in US President Donald Trump’s approach to tariffs on trade partners whipped up market uncertainty and dented confidence in the economic outlook.
Shares dropped from Sydney to Hong Kong with Japan’s Nikkei-225 Stock Average tumbling more than 2%. European equity-index futures dropped while contracts for the S&P 500 were little changed after declines on Wall Street. An index of the dollar fell for a fifth session, its longest losing streak in almost a year. Bitcoin slumped as details of a US strategic reserve underwhelmed.
Traders pointed to uncertainty over Trump’s tariffs. US stocks failed to stage a rebound even after a decision by Trump to delay levies on Mexican and Canadian goods covered by the North American trade deal, underscoring the fragile appetite for risk. Financial markets have whipsawed this week as investors deal with geopolitical uncertainty and conflicting signals from the US about the levies.
“Confusion reigns around the Trump Administration policy agenda,” said Chris Weston, head of research for Pepperstone Group. “While there are few signs of panic, funds and fast-money accounts cut equity risk.”
Wall Street strategists have been debating whether the Trump administration would be swayed on its tariff plans by a decline in equities. The thinking being that Trump will ditch policies if the stock market — which he touts as a report card — drops and rattles investors. Various firms even mapped out how much pain Trump could tolerate in the S&P 500 Index before retreating. That index level became known as “the Trump put,” in reference to a put option.
So far, Trump has given little indication he’ll change course. The president downplayed the reaction to the latest developments, saying “I’m not even looking at the market.” That followed his comments to Congress earlier this week that levies will cause “a little disturbance, but we’re OK with that. It won’t be much.”
European-equity index futures fell as much as 0.9% during Asian trading. Contracts for the S&P 500 pared gains late in the day after US chipmaker Broadcom Inc.’s upbeat revenue forecast had stoked optimism on artificial-intelligence. Broadcom shares jumped 13% in after-hours trading.
Treasuries were slightly higher Friday. The Mexican peso and the Canadian dollar rose on news of the potential tariff reprieve. On Thursday, Trump delayed levies on goods covered by the North American trade deal from the two countries until April 2. Later comments from Treasury Secretary Scott Bessent all but confirmed tariffs will be coming. Bessent rejected the idea that tariff hikes will ignite a new wave of inflation, and suggested that the Federal Reserve ought to view them as having a one-time impact.
European stocks have advanced almost 10% this year, as rate cuts and Germany’s plan to raise defense spending boost the market. Meanwhile, a gauge of Chinese stocks listed in Hong Kong has surged almost 23% so far this year on optimism over the nation’s artificial-intelligence adoption drive and expected stimulus from Beijing.
While the creation of the Bitcoin-specific reserve fulfills a promise Trump made on the campaign trail, the details fell short of industry expectations. Bitcoin dropped as much as 5.7% before paring some of the losses.
In Asia, China’s exports reached a record so far this year as higher US tariffs, and the threat of more to come, drove front-loading of shipments.
Investors will be focused on US nonfarm payrolls data on Friday, which may help traders identify the path ahead for interest rates. The report from the Bureau of Labor Statistics will provide an update about momentum in the labor market that’s been the key support — at least until January — of household spending and the economy.
Fed Chair Jerome Powell is slated to speak at a monetary policy forum Friday afternoon. Policymakers next meet March 18-19 and they’re expected to hold interest rates steady as they gauge the labor market and inflation trends as well as recent government policy shifts. Meanwhile, Fed Reserve Governor Christopher Waller said he wouldn’t support lowering interest rates in March, but sees room to cut two, or possibly three, times this year.
“If the labor market, everything, seems to be holding, then you can just kind of keep an eye on inflation,” Waller said Thursday at the Wall Street Journal CFO Network Summit. “If you think it’s moving back toward target, you can start lowering rates. I wouldn’t say at the next meeting, but could certainly see going forward.”
In commodities, oil was on track for the biggest weekly decline since October, while gold was set for a gain as traders sought havens.
Key events this week:
Eurozone GDP, Friday
US jobs report, Friday
Fed Chair Jerome Powell gives keynote speech at an event in New York hosted by University of Chicago Booth School
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