(Bloomberg) — Asian shares rose after President Donald Trump played down fears of a recession, which helped US stocks stage a late recovery after whipsawing all day.
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Shares advanced in Japan, Hong Kong and South Korea while Australian equities fell, with the benchmark S&P/ASX 200 index hovering near a correction. Trump ruled out an exemption from steel and aluminum tariffs despite a lobbying campaign by Australian Prime Minister Anthony Albanese.
Futures contracts for the S&P 500 and the tech-heavy Nasdaq 100 rose in early trading after Trump said he doesn’t see a US economic recession, downplaying Wall Street’s jitters around his trade war. Treasuries and a gauge of the dollar’s strength edged up ahead of a consumer inflation reading later Wednesday, which will give clues on the direction of interest rates.
Trump’s tariff policy, geopolitical realignments over Ukraine, a sticky inflation and the unknown pace of the Federal Reserve’s interest-rate cuts have hit the markets this year, leaving US stocks on the verge of a correction. The VIX gauge of stock volatility is hovering near its highest since August, while a similar measure for Treasuries is at levels not seen since November as market participants remain nervous about US economic growth.
“Any relief from all that geopolitical noise is a good thing for markets right now,” said Ken Wong, an Asian equity portfolio specialist at Eastspring Investments. News regarding a ceasefire in Ukraine and relief in the tariff tensions between the US and Canada are helping, he said. “Things are quite different just eight hours ago.”
Market forecasters at banks including JPMorgan Chase & Co. and RBC Capital Markets have tempered bullish calls for 2025 as Trump’s tariffs stoke fears of slowing economic growth and investors question the lofty valuations of big technology shares. The latest came from Citigroup Inc. strategists, who downgraded their view on US stocks to neutral from overweight.
“What Trump has been doing has not been helpful for US equity markets,” said Neil Dutta at Renaissance Macro Research. “For now, I don’t see recession. We’ve never really had a recession from policy uncertainty itself. And, we don’t yet know how markets would respond if Trump’s escalation now results in de-escalation later.”
In the US Tuesday, the S&P 500 dropped 0.8% and the Nasdaq 100 lost 0.3%, though futures rose after the close of regular trading as Trump tried to damp concerns of a recession in the US economy.
“I don’t see it at all. I think this country’s going to boom,” he said at the White House. He added that markets “are going to go up and they’re going to go down. But you know what, we have to rebuild our country.”
The White House also confirmed that 25% tariffs on steel and aluminum would take effect on Canada and other nations, as Trump backed off a threat to impose 50% duties on the largest US trading partner’s metals.
Chinese stocks will also be closely watched as investors continue to rotate toward the nation’s equities from their US peers. A gauge of Chinese shares listed in Hong Kong is up 20% this year despite the threat of further US tariffs. Talks between the US and China on trade and other issues are stuck at lower levels, with both sides failing to agree on the best way to proceed, according to people familiar with the matter.
The budding “stability in the Chinese property market and governmental efforts to revive the wealth effect in the system will support consumption,” said Rajiv Batra, JPMorgan’s head of Asia and co-head of global emerging-market equity strategy. “And remember, China still has dry powder left.”
Elsewhere, Ukraine accepted a US proposal for a 30-day truce with Russia as part of a deal with the Trump administration to lift its freeze on military aid and intelligence for Kyiv, following eight hours of talks in Saudi Arabia on Tuesday.
On the US consumer inflation reading later Wednesday, economists forecast it stayed elevated last month after a large increase in January, adding to evidence that progress on taming prices has stalled. The consumer price index is seen advancing 0.3% in February after a 0.5% gain at the start of the year.
Markets “will be wary of further signs of sticky prices,” said Kyle Rodda, a senior analyst at Capital.com in Melbourne. “Further evidence of inflation stuck at current levels will raise concerns that the Fed will lack the wiggle room to cut rates if Trump’s economic policies cause a precipitous slowdown in economic growth.”
Key events this week:
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Canada rate decision, Wednesday
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US CPI, Wednesday
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Eurozone industrial production, Thursday
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US PPI, initial jobless claims, Thursday
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US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.3% as of 10:08 a.m. Tokyo time
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Japan’s Topix rose 0.7%
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Australia’s S&P/ASX 200 fell 1.6%
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Euro Stoxx 50 futures rose 0.8%
Currencies
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The Bloomberg Dollar Spot Index rose 0.1%
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The euro fell 0.1% to $1.0907
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The Japanese yen was little changed at 147.90 per dollar
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The offshore yuan was little changed at 7.2339 per dollar
Cryptocurrencies
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Bitcoin rose 0.2% to $82,934.32
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Ether fell 1.1% to $1,914.57
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess, Chris Bourke and Abhishek Vishnoi.
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