A man looks at an electronic board showing the numbers of the Nikkei Stock Average (left) on the Tokyo Stock Exchange and a USD/JPY foreign exchagne board (right) along a street in Tokyo on Apr 8, 2025. (Photo: AFP/Kazuhiro Nogi)

Markets stage mild rebound but Trump tariff uncertainty reigns

08 Apr 2025, 00:55 · CNA · Join

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HONG KONG: Asian and European markets battled on Tuesday (Apr 8) to recover from the previous day's tariff-fuelled collapse, though Donald Trump's warning of more measures against China and Beijing's vow to "fight to the end" raised concerns of a spiralling trade war.

Equities across the world have been hammered since the US president unveiled sweeping levies against friend and foe, upending trading norms, sparking talk of a global recession and wiping trillions of company valuations.

Investors fought to claw back some of those losses as they try to assess the possibility that Washington could temper some of the tariffs. Tokyo traded up more than six per cent - recovering much of Monday's drop - after Japanese Prime Minister Shigeru Ishiba held talks with Trump.

However, the US leader's threat to hit China with an extra 50 per cent tariffs - in response to its 34 per cent retaliation in kind - ramped up the chances of a catastrophic stand-off between the two economic superpowers.

Trump said he would impose the additional levies if Beijing did not heed his warning not to push back against his barrage of tariffs.

China fired back that it would "never accept" such a move and called the potential escalation "a mistake on top of a mistake".

If Washington "insists on a tariff war and a trade war, China will definitely fight to the end", China's foreign ministry spokesman Lin Jian said Tuesday.

"Pressure, threats and blackmail are not the right way to deal with China," he said.

In light of the turmoil gripping markets, Trump told Americans to "be strong, courageous, and patient".

While uncertainty rules, investors in most markets took the opportunity to pick up some beaten-down stocks.

Tokyo jumped six per cent, with Nippon Steel rallying just as much after Trump launched a review of its proposed takeover of US Steel that was blocked by his predecessor Joe Biden.

Hong Kong gained more than one per cent but was well short of recouping Monday's loss of more than 13 per cent that was the biggest one-day retreat since 1997.

Shanghai advanced 1.6 per cent after China's central bank promised to back major state-backed fund Central Huijin Investment in a bid to maintain "the smooth operation of the capital market".

Sydney and Mumbai added more than two per cent, while Manila gained three per cent. Seoul and Wellington also edged up.

London, Paris and Frankfurt rose more than one per cent, having dropped more than four per cent Monday.

WORSE TO COME?

The advances followed a less painful day on Wall Street, where the S&P and Dow fell but pared earlier losses, while the Nasdaq edged up.

Others however were not as fortunate. Taipei shed four per cent to extend the previous day's record loss of 9.7 per cent, while Singapore was off 2 per cent.

Trading in Jakarta was briefly suspended soon after the open as it plunged more than nine per cent as investors returned from an extended holiday, while the bourse in Vietnam - which has been hit with 46 per cent tariffs - shed more than six per cent.

Bangkok sank five per cent as it also reopened after a holiday, with losses tempered by the Stock Exchange of Thailand's decision to ban short-selling on most stocks.

Analysts warned that things could get worse.

"If none of the announced tariffs are reversed by deal-making in the next four weeks or so, the global economy risks entering an 'oil price shock' type crisis by mid-year," said Vincenzo Vedda, global chief investment officer at DWS.

Pepperstone's Chris Weston said it was unlikely that China will scrap its countermeasure, "so we assume a high risk that Trump will follow through with an additional 50 per cent tariff rate".

And JPMorgan Chase CEO Jamie Dimon told shareholders: "Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth" and likely increase inflation.

The trade war has also put the Federal Reserve in the spotlight as economists say it could send prices surging. Bank officials are now having to decide whether to cut interest rates to support the economy, or keep them elevated to keep a lid on inflation.

"Because the tariffs announced thus far are higher than previously expected, we think the risk is now skewed toward more rate cuts by year-end," said Nuveen chief investment officer Saira Malik.

"Our probability-weighted guidance has increased from a total of four Fed cuts through 2025 and 2026 to 6.6 cuts."

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