Market outlook: Asian stocks cautious as tariff uncertainty looms; oil prices dip on surprise OPEC+ output hike

Time of India

2 days ago

Representative image (Picture credit: AP)
Asian markets slipped into the red on Monday as fresh confusion over the US tariff policy weighed on investor sentiment, while oil prices extended losses after OPEC+ surprised markets with a bigger-than-expected output hike.
Japanese shares shed 0.3%, South Korea's KOSPI declined 0.7%, and MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.1%. US stock futures were also under pressure, with S&P 500 and Nasdaq futures falling 0.3% each.
As per Reuters, the weak mood came after US President Donald Trump said the US would notify countries of higher tariff rates by July 9, with new rates taking effect on August 1. Trump had earlier announced a base tariff of 10%, with the possibility of levies going up to 50%.
However, little clarity was provided on which nations the new deadlines applied to, adding to investor anxiety.
"President Trump's going to be sending letters to some of our trading partners saying that if you don't move things along, then on August 1, you will boomerang back to your April 2 tariff level," US treasury secretary Scott Bessent told CNN.
The uncertainty comes as major US trading partners, including India, Japan, and the EU, are reportedly at critical stages of negotiation.
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'If reciprocal tariffs are implemented in their original form or even expanded, it will intensify downside risks to US growth and increase upside risks to inflation,' analysts at ANZ warned in a note, as per news agency Reuters.
The tariff uncertainty has also kept currency markets subdued. The US dollar index remained near four-year lows at 96.913, while the yen stood at 144.38 per dollar. Safe-haven US Treasuries saw mild buying, with 10-year yields dipping to 4.326%.
Oil markets were rattled further after OPEC+ announced on Saturday a surprise production increase of 548,000 barrels per day in August, higher than in previous months. Brent crude fell $0.80, or 1.2%, to $67.50 a barrel, and US WTI dropped $1.32 to $65.68 per barrel in early trade, as per Reuters.
"The increased production clearly represents a more aggressive competition for market share and some tolerance for the resulting decline in price and revenue," said Tim Evans of Evans Energy, as quoted by Reuters.
OPEC+ also signalled another potential hike in September, with analysts from Goldman Sachs and JPMorgan warning this could lead to a crude surplus later in the year. Saudi Arabia, meanwhile, raised its August price for Arab Light crude to a four-month high for Asian buyers, indicating confidence in demand.
As per Bloomberg, despite current tightness in the oil market, UBS analyst Giovanni Staunovo cautioned that "rising risks like ongoing trade tensions" could weaken the outlook over the next 6–12 months.
Adding to geopolitical uncertainty, China imposed procurement restrictions on EU-based medical device firms, complicating its attempts to ease trade tensions with the US.
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