Asian stocks mixed as traders shrug at US-Vietnam trade deal
Attention was also on Washington as Republicans struggled to push Donald Trump's tax-slashing budget bill through the House of Representatives amid warnings it will inflate an already ballooning national debt.
While the Vietnam agreement provided hope that other governments can reach agreements with Washington, dealers were cautious as it emerged that the country must still pay tolls of as much as 40 per cent for certain exports.
With less than a week left until the US president's July 9 deadline to hammer out pacts to avoid his "reciprocal" levies, just three countries have done so - stoking worries his "Liberation Day" measures will kick in and spark fresh market turmoil.
In a post on his Truth Social platform, Trump wrote: "It is my Great Honor to announce that I have just made a Trade Deal with the Socialist Republic of Vietnam after speaking with To Lam, the Highly Respected General Secretary of the Communist Party of Vietnam."
He said that under the "Great Deal of Cooperation", imports of Vietnamese goods will face a 20 per cent US tariff, while goods that pass through Vietnam to circumvent steeper trade barriers - so-called "transshipping" - will see a 40 per cent tariff.
The news means Hanoi will avoid paying the 46 per cent tolls initially applied on the April 2 tariff blitz, though the cost of goods going into America will still surge.
Hanoi traders were unimpressed, with the Vietnamese capital's stock market down in early trade.
A third record close in four days for Wall Street's S&P 500 and Nasdaq also did little to lift buying sentiment elsewhere in Asia, with Hong Kong, Shanghai, Tokyo, Sydney and Wellington all falling.
Singapore, Seoul, Taipei, Manila and Jakarta edged up.
Trump said this week he will not push back his deadline to make more deals though he and some of his officials have said a number were in the pipeline.
South Korean President Lee Jae Myung said Thursday his administration was doing its "utmost" to secure an agreement.
However, he warned that "it's certainly not easy, that much is clear. And to be honest, I can't say with confidence that we'll be able to wrap everything up" by the deadline.
The dollar continued to struggle as traders boosted rate cut bets after data showed the private sector unexpectedly shed jobs last month for the first time since March 2023, suggesting the labour market was slackening.
The reading came a day before the much-anticipated non-farm payrolls report that is used by the Fed to guide policy.
Traders widely expect the bank to cut rates twice this year but there is growing speculation that it could make three, with one possibly at the July meeting.
"Payrolls is the focus (Thursday), where consensus is for a 110,000 payrolls gain and a slight lift in the unemployment rate to 4.3 per cent," said National Australia Bank's Taylor Nugent.
"It would take more than that to dent (policy board) members' comfort (that) the labour market is resilient enough to wait beyond July for more clarity on inflation and the outlook."
Meanwhile, US Treasury yields rose amid fresh worries in the bond market over Trump's "Big, Beautiful Bill" that cuts taxes as well as spending on programmes such as Medicaid.
Independent analysis suggests it will add US$3 trillion to the already-colossal US debt mountain, which observers warn could deal a fresh blow to the world's top economy. - AFP
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
34 minutes ago
- New Straits Times
Port charges hike, container volume growth to boost Westports' Q3 earnings
KUALA LUMPUR: Westports Holdings Bhd's third-quarter 2025 (3Q25) results are expected to benefit from the 15 per cent increase in port charges effective July 15, according to CGS International. In a note, the firm said the anticipated year-on-year (YoY) growth in average revenue per twenty-foot equivalent unit (ARPT), coupled with sequentially stronger container volumes in 2Q25, could serve as potential share price re-rating catalysts for Westports. "The 15 per cent rise in port charges from July 15 will also boost 3Q25 results, which is why we reiterate 'Add' on Westports," it said. CGS has raised its target price to RM6.41, citing expectations of stronger storage income amid sustained high yard utilisation. It also noted that Westports' yard utilisation remained elevated at 90 per cent or higher during the first half of 2025 (1H25). This was partly due to a government crackdown on illegal e-waste and metal waste imports since 2024. The stricter customs checks have caused an estimated 5,000 to 6,000 containers to remain stranded at Westports' yard, some for up to 60 days. These containers are expected to either be cleared for entry into Malaysia or re-exported to their ports of origin. If importers cannot be identified, Westports will recover storage charges from the shipping lines. CGS said this backlog contributed to a 4.3 per cent YoY increase in ARPT in 1Q25 and expects the positive trajectory to have continued into 2Q25. Meanwhile, CGS also believes that container volume growth in 2Q25 likely exceeded the modest 0.6 per cent YoY growth seen in 1Q25. This was driven by the launch of the Gemini Cooperation shipping alliance on Feb 1, which led to changes in shipping routes and cargo flows that boosted Westports' transshipment volumes. In April, Evergreen shifted two of its container services from Port of Tanjung Pelepas to Westports, contributing further to sustained volume gains. On the impact of the US-China trade war, CGS said shipping lines had initially diverted vessels to alternative routes, but restored capacity between the two countries as US demand rebounded after mid-May. These abrupt changes in vessel deployment contributed to higher transshipment activity at Port Klang and Singapore, according to Westports. Despite the positive developments, CGS cautioned that downside risks remain for the group. These include the threat of a global recession that could weigh on container trade volumes, and the possibility of the US reintroducing punitive trade tariffs on global economies, excluding China, once the current 90-day reprieve ends on July 8. CGS has lowered its cost of equity assumption for Westports to 8.2 per cent from 9.4 per cent, citing a lower risk profile for the group following improved clarity on future port charges.
New Straits Times
34 minutes ago
- New Straits Times
Japan's household spending rises at quickest pace in 3 years as tariff risks loom
TOKYO: Japanese household spending surged at the fastest pace in nearly three years in May, offering some hopes that tepid consumption might be turning a corner even as risks from US tariffs remain a drag on confidence and economic growth. Analysts say consumers will be wary of the outlook at a time US President Donald Trump's global trade war is raising uncertainty for businesses and policymakers worldwide. Consumer spending in the world's fourth-largest economy in May rose 4.7 per cent from a year earlier, internal affairs ministry data showed on Friday, better than the median market forecast for a 1.2 per cent gain and rising at the fastest pace since the 5.1 per cent increase in August 2022. On a seasonally adjusted, month-on-month basis, spending increased 4.6 per cent, versus an estimated 0.4 per cent uptick and rising at the quickest pace since March 2021 when it surged 6.7 per cent. An internal affairs ministry official attributed the better-than-expected results to higher spending on one-off factors such as automotive-related products and others like eating out. "The three-month moving average in household spending has been positive since December last year and consumption appears to be recovering," the official said. Consumption and wage trends are among key factors the Bank of Japan is watching to gauge economic strength and decide how soon to raise interest rates. Hefty pay hikes have been seen as essential to counter inflation-induced sharp increases in the cost of living. Japanese companies agreed to raise wages by 5.25 per cent this year, marking the biggest pay hike in 34 years, the country's largest labour union group Rengo said on Thursday. "With the yen's appreciation and the downward trend in crude oil prices, it is anticipated that real wages will turn positive year-on-year in the second half of the year as inflation slows," which would lead to a gradual recovery in consumption, said Yutaro Suzuki, an economist at Daiwa Securities. However, Japanese policymakers and analysts are concerned that global trade tensions triggered by Trump's tariff policies may dent the pay-hike momentum and complicate BOJ's efforts to normalise monetary policy. The internal affairs ministry also said consumers remained wary of loosening their purse strings on items with higher prices, with spending on rice dropping by 8.2 per cent in May from a year ago since they cut back on purchasing it. On the trade front, significant uncertainty remained. Trump on Tuesday cast doubt on a possible deal with Japan, indicating that he could impose a tariff of 30 per cent or 35 per cent on Japanese imports — well above the 24 per cent rate he announced on April 2 and then paused until July 9. "If corporate earnings are significantly squeezed (due to the US tariffs), this could have a negative impact on winter bonuses and spring labour negotiations in 2026, which could lead to a slowdown in wage increases," said Masato Koike, senior economist at Sompo Institute Plus.
New Straits Times
34 minutes ago
- New Straits Times
Hong Kong's de facto central bank intervenes to defend currency peg
HONG KONG: Hong Kong's de facto central bank said it intervened twice on Friday and sold US$3.78 billion against the Hong Kong dollar after the local currency hit the weak end of its trading band. The city's currency is pegged between 7.75–7.85 to the US dollar, and the Hong Kong Monetary Authority (HKMA) intervenes at both ends to underpin the peg. The aggregate balance, the key gauge of cash in the banking system, will shrink by a total of HK$29.6 billion to HK$114.5 billion next Monday, HKMA said in a statement. This follows US$2.25 billion sold earlier this week and US$1.2 billion last week to defend the peg. The Hong Kong dollar traded at 7.8479 against the greenback in early Asia trade.
