Asian stocks hesitant, dollar slides on Trump's attack on Powell
Investors eye trade deals ahead of tariff deadline
Dollar slides after Trump attacks Powell again
Oil inch higher to stabilize after a volatile month
SINGAPORE, June 26 (Reuters) – Asian stocks stuttered on Thursday, while oil prices stabilized and the euro was perched at a 3.5-year high as investors weighed geopolitical, economic and fiscal uncertainties as they braced for US President Donald Trump's deadline on tariffs.
Markets have been soothed by a ceasefire between Israel and Iran that appeared to be holding, reducing the risks of disruptions to the global oil trade and underpinning sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan was little changed in early trading, as the rally in Wall Street took a breather overnight. Tokyo's Nikkei rose 0.9% to a four-month high.
The US dollar selling kicked up a notch after a media report said Trump has toyed with the idea of selecting and announcing Federal Reserve Chair Jerome Powell's replacement by September or October in a bid to undermine his position.
That pushed the euro to its strongest level since November 2021. It last fetched $1.6805. The Swiss franc firmed to a decade-high while the Japanese yen strengthened 0.35% to 144.70 per dollar.
Trump has repeatedly criticised Powell for not cutting interest rates and has floated the idea of firing him or naming a successor soon, denting investor confidence in US assets and undermining the central bank's independence.
'I think it's a given that Trump's pick to succeed Powell, when it comes, will be one that sits at the highly dovish end of the spectrum and will support Trump's agenda of lowering interest rates,' said Tony Sycamore, market analyst at IG.
'The issue with this is it will resurface questions from earlier in the year around the Fed's independence, which, as we saw, undermines confidence in the Fed and the USD.'
The dollar index, which measures the US currency against six rivals, wallowed at its lowest level since March 2022. The index has slid 10% this year as investors, worried by Trump's tariffs and their on US growth, look for alternatives.
Financial markets remain on edge over Trump's chaotic trade policies as the clock ticks down to his July 9 deadline for trade deals.
Powell, who resumed two days of congressional testimony on Wednesday, said Trump's tariff plans may well just cause a one-time jump in prices, but the risk it could fuel more persistent inflation is large enough for the central bank to be careful in considering further rate cuts.
Fed officials still expect to cut interest rates this year, but the timing is uncertain as officials wait on looming trade deadlines and for more certainty about the scope of the tariffs that will be imposed and the ways that rising import levies influence prices and economic growth.
'No one knows exactly how tariffs will impact inflation, which will keep central banks in conservative mode, particularly the Fed,' said Bank of America strategists, noting downside risks to global growth remain relevant, not only due to trade wars but also due to geopolitical developments.
'We are carefully monitoring fiscal policy across key countries that can affect global interest rates. Unsustainable fiscal dynamics can trigger an accident in bond markets,' they said in a note.
In commodities, oil prices inched higher to continue recovering after a volatile month so far due to the conflict between longtime rivals Israel and Iran.
Brent crude futures rose 0.2% to $67.82 a barrel, while US West Texas Intermediate crude (WTI) gained 0.28% to $65.1.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
IOL News
2 hours ago
- IOL News
Nestle struggles amid weak China market
File photo of Nestle CEO Laurent Freixe. Image: AFP Nestle said on Tuesday its net profit fell in the first half of the year as the Swiss food giant behind Nespresso coffee capsules and KitKat chocolate bars struggles to turn around its fortunes amid sluggish consumer spending in China. The company whose brands also include Purina dog food, Maggi bouillon cubes, Gerber baby food and Nesquik chocolate-flavoured drinks, reported a 10.3% drop in first half profits to 5.1 billion Swiss francs (R113 billion). Sales, however, only dipped by 1.8 percent to 44.2 billion francs, which was due in large part to passing on higher cocoa and coffee prices to consumers, although faced even greater headwinds from the strong Swiss currency. "We are also taking decisive measures to strengthen our business in Greater China," said chief executive Laurent Freixe. The company said China, which has suffered sluggish domestic consumption amid a deflationary price environment, had a 0.7 percentage point impact on organic growth in the second quarter. Overall, the company reported 2.9% quarterly organic growth, which strips out currency effects and other elements to measure performance. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading Nestle warned China would continue to weigh on growth as it invested to turn around its performance. Nestle's shares fell 3.5% in a Swiss market that was flat overall, as the sales figures missed the analyst consensus calculated by Swiss financial news agency AWP. Net profit came in slightly higher than expected. Nestle made a surprise switch of its chief executive last year amid soft spending by consumers for food and household goods. Nestle's share price slumped by nearly a quarter last year, raising concerns in Switzerland, where pension funds invest heavily in the company. The company launched a number of measures to boost its product offering and cut costs. That was reflected in better organic growth in the second quarter compared to the same period last year, and Nestle said that it was expected to continue for the rest of the year. Nestle said it was maintaining its 2025 guidance "despite factoring in increased headwinds". It aims for an underlying trading operating profit margin of at least 16% this year, compared to 17.2% in 2024. It came in at 16.5% in the first half of the year. AFP
eNCA
3 hours ago
- eNCA
Australia lifts trade barriers on US beef
CANBERRA - Australia said it would lift trade barriers on beef from the United States, removing a major point of friction between Canberra and the Trump administration. US President Donald Trump singled out Australia as he unveiled his "Liberation Day" tariffs in April, accusing the close ally of banning American meat while cashing in on exports to the United States. Australia's stringent biosecurity rules block imports of cattle slaughtered in the United States, but born in Canada or Mexico. Threatened with 10 percent tariffs on beef shipped to the United States, one of its largest red meat markets, Australia has now dropped these barriers. Agriculture minister Julie Collins said the United States had adopted new quality controls that soothed Australia's worries. "The Department of Agriculture, Fisheries and Forestry is satisfied the strengthened control measures put in place by the US effectively manage biosecurity risks," she said in a statement. "Australia stands for open and fair trade -- our cattle industry has significantly benefited from this." Australia suspended US beef imports in 2003 after an outbreak of mad cow disease, a fatal and infectious condition that slowly eats away at the nervous system of cattle. Most of these restrictions were lifted in 2019, although some barriers remained on cattle slaughtered in American abattoirs but born elsewhere. Trump said Australians were "wonderful people" but accused them of banning US beef while exporting billions of dollars worth of meat to America. "They don't take any of our beef," he complained in April. Almost five percent of all the beef eaten in America is Australian, and that largely goes into burgers. In the first three weeks of July, Australia shipped almost 25,000 tonnes of beef and veal to the United States, official figures show.
TimesLIVE
8 hours ago
- TimesLIVE
Trump administration recommends location verification for AI chips
It added the US government should 'explore leveraging new and existing location verification features on advanced AI compute to ensure that the chips are not in countries of concern'. The recommendation drew support from two legislators who previously introduced bills that would require location verification of chips after sale over concerns that they are finding their way to countries such as China, where their export is banned. Key details — such as how the technology would be implemented and how much cost it would add — remain to be worked out, both in the proposed bills and the Trump administration's recommendations. 'I was encouraged to see that the recommended export control policy includes location verification mechanisms and aligns closely with our bipartisan Chip Security Act. 'I look forward to learning more of the technical details and next steps for end-use verification,' Representative Bill Foster, an Illinois Democrat who helped introduce a chip-location bill in May, told Reuters. 'Senator Cotton was pleased to see verification included in President Trump's AI Action Plan, as it's a vital part of his bipartisan, bicameral Chip Security Act and an important tool to keep advanced American technology out of the hands of Communist China,' said Patrick McCann, a spokesperson for Senator Tom Cotton, an Arkansas Republican who introduced a similar bill in the US Senate.
