Key points
- Shanghai, Sydney, Singapore, Seoul and Taipei led healthy gains
- Tokyo sank 1pc after Trump threatened to impose a fresh levy on Japan
- Investors are keeping eye on progress of US president’s signature multi-trillion-dollar tax-cutting bill
HONG KONG: Asian stocks rose Tuesday amid optimism countries will strike US trade deals, though Tokyo’s Nikkei sank after Donald Trump threatened to impose a fresh tariff rate on Japan as he hit out at the country over rice and autos.
The dollar also extended losses as investors grow increasingly confident the Federal Reserve will cut interest rates at least twice this year, with keen interest in US jobs data due this week.
Investors are also keeping an eye on the progress of the US president’s signature multi-trillion-dollar tax-cutting bill, which is being debated in the Senate.
While few agreements have been reached as the White House’s July 9 deadline approaches, equity markets are enjoying a healthy run-up on expectations that breakthroughs will be made or the timeline will be pushed back.
“Some wiggle room”
Comments from Trump and some of his top officials suggesting there could be some wiggle room have added to the positive mood, with National Economic Council director Kevin Hassett telling CNBC a “double digit” number of pacts, including frameworks, were near.
News that Canada had rescinded a tax affecting US tech firms, which had prompted Trump to halt trade talks, and restarted negotiations fuelled optimism that other governments would make deals.
All three main indexes on Wall Street rose again Monday, with the S&P 500 and Nasdaq each pushing to another record high, providing a springboard for Asia.
“Healthy gains”
Shanghai, Sydney, Singapore, Seoul and Taipei led healthy gains across the region.
However, Tokyo, which has enjoyed a strong run in recent weeks, sank one per cent after Trump threatened to impose a fresh levy on Japan over a row about the country accepting US rice exports.
“I have great respect for Japan, they won’t take our RICE, and yet they have a massive rice shortage,” Trump said.
“In other words, we’ll just be sending them a letter, and we love having them as a Trading Partner for many years to come,” he added.
“Big Beautiful Bill”
Japan has seen rice prices double over the past year owing to supply issues caused by various factors, piling pressure on Prime Minister Shigeru Ishiba ahead of key elections this month.
Trump’s outburst over the grain came after he had hit out at what he considered an unfair balance in the trade in cars between the two countries, and floated the idea of keeping 25 per cent tariffs on autos in place.
The Nikkei was also hit by a stronger yen as expectations for a series of Fed rate cuts weigh on the dollar.
Senators continue to debate Trump’s so-called “Big Beautiful Bill”, with its passage on a knife’s edge owing to wavering Republicans amid warnings it will add more than $3 trillion to deficits.
The president has called for lawmakers to get the mega-bill, which extends tax cuts and slashes spending on key entitlements, to his desk by July 4.
