Asian markets mostly rise on lingering trade deal optimism
The US president's outburst came after a series of announcements last week including warnings of 50 per cent levies on copper and Brazilian goods, 35 per cent on Canadian goods, and a possible 200 per cent charge on pharmaceuticals.
While observers warn the measures could deal a hefty blow to the global economy, investors are largely optimistic that governments will hammer out agreements before the White House's August 1 deadline.
In announcing his latest measures on Saturday, Trump cited Mexico's role in illicit drugs flowing into the United States and a trade imbalance with the European Union.
The move threw months of painstaking talks with Brussels into disarray.
European Commission chief Ursula von der Leyen has insisted the bloc still wants to reach an accord - and on Sunday delayed retaliation over separate US duties on steel and aluminium as a sign of goodwill.
EU officials threatened in May to impose tariffs on US goods worth around 100 billion euros (US$117 billion), including cars and planes, if talks fail.
French President Emmanuel Macron backed efforts to reach an agreement that "reflects the respect that trade partners such as the European Union and the United States owe each other".
But he urged the bloc to "step up the preparation of credible countermeasures" if the two sides fail to reach an agreement.
Analysts also pointed out that the levies against Mexico and Canada come even after Trump agreed a trade deal with the two during his first administration.
Still, Asian investors brushed off Friday's losses in New York and Europe, remaining hopeful that governments will strike deals with Washington and avoid the worst of the tariffs.
Hong Kong, Shanghai, Sydney, Seoul, Singapore, Manila and Jakarta all rose, with Tokyo, Wellington and Taipei edging down.
Bitcoin hit a new record high of US$119,490.
"It is hard to say whether the muted market response over the week is best characterised by resilience or complacency," said National Australia Bank's Taylor Nugent.
"But it is difficult to price the array of headlines purportedly defining where tariffs will sit from 1 August when negotiations are ongoing."
Traders are also keeping a nervous eye on the Federal Reserve as Trump continues to berate boss Jerome Powell for not cutting interest rates soon enough, saying Sunday "I hope he quits", and adding "He should quit".
Reports also said the president's allies were targeting the Fed chief over his handling of an expensive renovation at the bank's headquarters, with some suggesting they were building a case to have him removed over it.
However, strategists warned that such a move would bring the independence of the central bank into question and send US Treasury yields soaring and the dollar plunging. - AFP
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The Star
10 minutes ago
- The Star
Fringe party vows to put ‘Japan First' to chip away at LDP rule
TOKYO: Japan's Liberal Democratic Party has dominated the country for the last 70 years, losing control of the government only twice. A five-year-old party cobbled together on social media during the pandemic is trying to weaken that grip on power by tapping into voter frustrations and anti-foreigner sentiment. The party, Sanseito, is gaining traction in the polls and is focused on peeling away current LDP voters in the upper house election on July 20. Led by Sohei Kamiya, a former high school teacher, it advocates for restrictions on immigration as well as laws against foreigners buying Japanese companies or land. Sanseito promises to cut taxes, protect rice farmers, boost the country's birth rate and curb the use of pesticides. With the election slogan of "Japanese First' and promises to make people rich, the party's stance echoes that of Donald Trump. Sanseito is capitalising on voter dissatisfaction driven by the surging cost of food and rent. It is also explicitly appealing to conservative voters who have been alienated by Prime Minister Shigeru Ishiba cooperating with centrist parties after the LDP lost its majority in the lower house. "The support base consists of people who feel they have been sidelined since the Covid-19 pandemic and inflation,' said Toru Yoshida, a professor of political science at Doshisha University. "This includes the bedrock conservative voters who became disillusioned as the society shifted toward liberalism, those who became distrustful of established political parties and stopped voting, and vulnerable young male demographics.' The LDP and its coalition partner Komeito have a majority of 141 of the chamber's 248 seats. Only 66 of those seats will be contested, meaning the coalition can afford to lose as many as 16 seats and still retain control. A compilation of recent polls gives Sanseito a chance of winning between eight and 17 seats. The largest opposition force, the Constitutional Democratic Party, is seen winning between 22 and 32 seats. The Democratic Party for the People could pick up between 11 and 19 seats, the Japan Innovation Party could take between five and seven seats, while the Japanese Communist Party is forecast to get between three and six seats. The LDP and Komeito will almost certainly remain as the largest bloc in the upper house under all polling scenarios. The less powerful upper house doesn't have the ability to choose the prime minister, so even if the ruling coalition loses its majority, the most likely scenario is that the ruling coalition will continue to run the country, provided a lower house election isn't called. Still, the coalition would be further weakened and in need of support from one or more of the opposition parties to make progress on policy. Sanseito is unlikely to be its first choice. So for now at least, even if Sanseito does better than expected, its success would likely pose more of a threat to Ishiba's role as prime minister than the LDP as a whole. Its agenda could nevertheless sway the government's agenda - Ishiba's administration this month announced the establishment of a secretariat to oversee policies relating to foreigners. Kamiya, who founded the party out of an online DIY political movement, has pointed to similarities on themes such as immigration between Sanseito and the Republicans in the US, Germany's AfD and France's National Rally. Campaigning in the town of Kawaguchi on the outskirts of Tokyo, Sanseito deputy party leader Yuichiro Kawa backed local candidate Tsutomu Otsu who promised to "do something about the foreigner problem.' About 7.3 per cent of the town's population are non-Japanese, including a sizable Kurdish community. The message resonated with supporters. "I've consulted about noise issues caused by the foreign community with various political parties and even the police, but nobody has changed the situation,' said Akihiro Nakada, 37, a longtime resident in the town. "But I believe Sanseito may be able to actually take real action,' he said after Otsu's speech. The party says it is not promoting discrimination against foreigners but rather is opposing "excessive acceptance of foreigners.' Kamiya, the 47-year-old founder of the party, began his political career as a local LDP council member in Osaka. After getting elected to Japan's upper house on the Sanseito ticket, he gained attention in 2022 by challenging the safety of Covid vaccines and opposing mask mandates. The party's YouTube channel has roughly 400,000 subscribers, compared with with around 140,000 for the LDP's channel and 45,000 for the Constitutional Democratic Party. In some recent polls, the party ranked among the top choices for voters who rely heavily on social media. The party also promises to cut taxes and give parents 100,000 yen (US$680) a month per child until they turn 15. Japan's population has declined for the last 14 years, falling by 550,000 in 2024 with the percentage of children hitting a record low. The decline was partially offset by an increase in the number of foreign-born residents. The lower taxes and increased social spending promised by Sanseito would likely increase upward pressure on the country's debt burden, already the highest among developed economies, with total debt projected to reach 235 per cent of GDP this year. Yields on Japanese government bonds have been rising amid concern about the country's ability to finance its debt. At rallies, supporters dress in the party's signature orange to pay homage to the country's sun goddess who is also the progenitor of the Imperial family in Japanese mythology. While the party's rhetoric has resonated with some voters feeling left behind by Japan's more established parties, it's also brought a backlash. Sanseito says some of its candidates have received death threats. Protesters at a Sanseito rally in Tokyo held signs reading: "There is no such thing as first- and second-class humans.' The party is also trying to win over rural voters, traditionally one of the most loyal voting blocs for the LDP. It wants to make Japan completely self-sufficient in food by 2050. Currently, the country imports about half of its food. At the same time, it wants to promote organic framing and limit the use of chemical fertilisers. "They present a bizarre mix of policies,' said Doshisha University's Yoshida. "There's no clear connection among these policies, and it's hard to place them ideologically, but each one resonates with some part of their support base.' Kamiya has given different answers as to whether Sanseito would enter into a coalition with the LDP. In one interview, he expressed opposition to the idea, while in another, he said it would be up to the party's members, not the leadership. However, Kamiya hopes the upcoming elections may set him up to be kingmaker. "If Sanseito wins enough seats, we may hold the balance of power,' Kamiya said in a campaign speech in Tokyo on July 4. - Bloomberg
The Star
10 minutes ago
- The Star
China steps in as US pulls back from diplomacy, report says
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The Star
10 minutes ago
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Asian markets mixed as China's economy meets forecasts
HONG KONG: Markets were mixed Tuesday (July 15) as positive Chinese economic data was offset by weak consumer spending, while optimism that governments will hammer out deals to avoid the worst of Donald Trump's tariff threats provided support. Beijing said gross domestic product expanded 5.2 per cent in April-June thanks to a surge in exports as businesses front-loaded shipments ahead of the US president's stiff levies, and after the superpowers agreed to work on a long-term pact. While the reading was slightly slower than the first quarter, it was in line with forecasts in an AFP survey and comes after figures on Monday showed exports soared more than expected in June, including a strong recovery in goods sent to the United States. Meanwhile, industrial output came in above expectations. However, Tuesday's reports showed efforts to boost consumer activity continue to fall flat, with retail sales expanding 4.8 per cent last month, well below estimates in a Bloomberg study and highlighting the work leaders face in kickstarting the economy. China's recovery has been hamstrung by a bruising trade war with the United States, driven by Trump's sweeping tariffs, though the two de-escalated their spat with a framework for a deal at talks in London last month. But observers warn of lingering uncertainty. "The national economy withstood pressure and made steady improvement despite challenges," National Bureau of Statistics (NBS) deputy director Sheng Laiyun told a news conference. "Production and demand grew steadily, employment was generally stable, household income continued to increase, new growth drivers witnessed robust development, and high-quality development made new strides," he said. And the US president upped the ante Monday, warning Russia's trading partners - which include China - that he will impose tariffs reaching 100 per cent if Moscow fails to end its war on Ukraine within 50 days. After a strong start to the day, Hong Kong pared an early rally while Shanghai dipped into negative territory. Elsewhere, Tokyo, Sydney, Singapore, Wellington, Taipei and Jakarta rose, with Seoul and Manila in the red. Trump also Monday said he will impose antidumping duties on most imports of fresh tomatoes from Mexico, with the US Commerce Department accusing its neighbour of engaging in unfair trade. That came after he said he would hit the country and the European Union with 30 per cent levies, having announced a slew of measures against key partners last week if deals are not struck by August 1. However, analysts said investors viewed the warnings as negotiating ploys rather than a genuine move, citing previous threats that were later rowed back. The mixed performance in Asian markets followed a healthy day on Wall Street, where the Nasdaq hit another record high. Bitcoin edged down after hitting a record high above US$123,200 on Monday thanks to optimism over possible regulatory changes for crypto assets in the United States. - AFP
