Asia report: Markets stage rocketing rebound on Trump tariff pause

10th Apr 2025 09:09

(Sharecast News) - Asia-Pacific markets rallied sharply on Thursday, tracking Wall Street's strongest rally since 2008 after US president Donald Trump announced a 90-day suspension of higher tariffs on all countries except China.

The regional bounce came on the back of a stellar session on Wall Street overnight, where the Dow Jones Industrial Average rocketed by just under 3,000 points on the back of Trump's tariff pause.

"Asian stocks experienced their largest gain in over two years as global financial markets bounced back following Trump's suspension of most of his extensive reciprocal tariffs," said TickMill market strategy partner Patrick Munnelly.

"Treasuries made a recovery after a turbulent trading session.

"Chinese stocks rose amid expectations of further stimulus after Trump increased tariffs on the nation to 125%."

Munnelly noted that senior officials in Beijing were set to convene to deliberate on new economic strategies.

"In the wake of global equity markets losing $10trn and a dip in US Treasuries, Trump announced a 90-day suspension of the so-called reciprocal tariffs, impacting numerous trading partners after midnight.

"Nevertheless, he raised tariffs on China to 125%, a move that followed the Asian country's retaliation by increasing tariffs on US imports to 84%.

"Oil prices saw another decline as investors adjusted to unexpected policy shifts; gold prices saw a slight increase."

Markets stage whiplash-inducing rebounds across the region

The Nikkei 225 led regional gains with a jump of 9.13% to 34,609.00, as investors welcomed the reduced near-term trade tension.

The broader Topix index surged 8.09%.

Japan's rally was driven by outsized gains in industrial and tech stocks, with Fujikura soaring 17.46%, Renesas Electronics rising 15.69%, and Kawasaki Heavy Industries climbing 15.49%, as the easing of trade pressure boosted sentiment across export-heavy sectors.

In China, markets posted more modest gains amid concerns over the targeted tariff escalation.

The Shanghai Composite added 1.16% to 3,223.64, while the Shenzhen Component rose 2.25%.

Shares of Zhejiang Tiantai Xianghe Industrial, Gree Real Estate, and Orient International each advanced over 10%.

Despite the higher tariffs on Chinese goods - described by T Rowe Price's Wenli Zheng as "effectively prohibitive", according to CNBC - the direct impact on China's broader economy was expected to be limited, according to Zheng's note.

Hong Kong's Hang Seng Index gained 2.06% to 20,681.78, led by JD Health International, Lenovo Group, and BYD Electronic, all of which posted solid gains amid broader relief over the temporary pause in global trade friction.

South Korea's Kospi 100 jumped 6.79% to 2,449.31, bolstered by strong performances from Hyundai Electric Energy Systems, SK IE Technology, and SK Square, as tech and energy names rebounded in line with global optimism.

Australia's S&P/ASX 200 climbed 4.54% to 7,709.60, with high-growth stocks leading the charge.

Zip Co soared 20.66%, followed by double-digit gains in Mineral Resources and Netwealth Group.

In New Zealand, the S&P/NZX 50 rose 3.34% to 12,201.43, with Mainfreight, Synlait Milk, and Skellerup Holdings among the top performers.

Currency markets reflected the broad risk-on tone, with the dollar last down 1.21% on the yen to trade at JPY 145.97, as it weakened 0.15% against the Aussie to AUD 1.6227, and retreated 0.64% to NZD 1.7602.

Oil prices were also lower, with Brent crude futures last down 2.44% on ICE at $63.88 per barrel, and the NYMEX quote for West Texas Intermediate off 2.42% at $60.84.

Bond yields in focus as Goldman cuts China GDP forecast

Japanese government bond yields rose on Thursday as investors shifted funds into equities following a temporary suspension of tariff hikes by US president Trump.

The yield on the 10-year Japanese government bond climbed 10 basis points to 1.375%, while yields on the five-year and two-year bonds rose by five and six basis points, respectively.

In contrast, Australia's 10-year bond yield slipped seven basis points to 4.308%, even as shorter-dated yields rose.

According to CNBC, the five-year and two-year yields added five and 10 basis points respectively, reflecting a mixed reaction to shifting global risk sentiment.

Meanwhile, US Treasury yields eased during Asia trading hours, with the 10-year yield falling to 4.2869%, following a sharp rise overnight.

Elsewhere, China's economic outlook came under renewed pressure, as Goldman Sachs cut its forecast for the country's 2025 real GDP growth to 4% from 4.5%, citing the effect of sharply higher US tariffs on Chinese goods.

The investment bank said it now expected the People's Bank of China to reduce policy rates by 60 basis points, up from a previously forecast 40 basis points.

Goldman estimated that the cumulative increase in the US effective tariff rate on China - from 11% to 125% since Trump took office - could reduce China's GDP by 2.2 percentage points next year.

Adding to the strain, Chinese consumer prices fell for a second consecutive month, underscoring weak domestic demand.

March's consumer price index declined 0.1% year on year, following a 0.7% drop in February, defying expectations for flat inflation.

Producer prices dropped 2.5% from a year earlier, the largest decline since November 2024 and the 29th straight month of contraction, as deflationary pressures deepened amid ongoing trade tensions.

In contrast, Japan's producer prices rose 4.2% in the year to March, exceeding forecasts for a 3.9% gain and reflecting mounting raw material costs.

The corporate goods price index also advanced 0.4% on the month, continuing to signal price pressures at the wholesale level as Japanese firms contend with elevated input costs and global policy uncertainty.

Reporting by Josh White for Sharecast.com.