Asian shares set for worst week since April after US tariff blitz
European stock markets are on track for a lower open, with EUROSTOXX 50 futures down 0.5 per cent. Both Nasdaq futures and S&P 500 futures slipped 0.2 per cent after earnings from Amazon failed to meet lofty expectations, sending its shares tumbling 6.6 per cent after hours.
Late on Thursday, President Donald Trump signed an executive order imposing tariffs ranging from 10 per cent to 41 per cent on U.S. imports from foreign countries. Rates were set at 25 per cent for India's U.S.-bound exports, 20 per cent for Taiwan's, 19 per cent for Thailand's and 15 per cent for South Korea's.
He also increased duties on Canadian goods to 35 per cent from 25 per cent for all products not covered by the U.S.-Mexico-Canada trade agreement, but gave Mexico a 90-day reprieve from higher tariffs to negotiate a broader trade deal.
"The latest tariff announcement offers some surface-level clarity, but beneath it lies a fog of uncertainty," said Thomas Rupf, Chief Investment Officer, Asia of VP Bank.
"Despite some countries securing better terms, the overall impact is negative. We're entering an era of higher barriers to trade, which will have an impact and hurt growth."
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1 per cent to bring the total loss this week to 2.2 per cent, the biggest since April. South Korea's KOSPI plunged 3.5 per cent while Taiwanese shares fell 0.5 per cent.
Japan's Nikkei dropped 0.6 per cent. Chinese blue chips fell 0.7 per cent and Hong Kong's Hang Seng index lost 0.8 per cent.
Overnight, Wall Street failed to hold onto an earlier rally. Data showed inflation picked up in June, with new tariffs pushing prices higher and stoking expectations that price pressures could intensify, while weekly jobless claims signalled the labour market remained on a stable footing.
Fed funds futures imply just a 39 per cent chance of a rate cut in September, compared with 65 per cent before the Federal Reserve held rates steady on Wednesday, according to the CME's FedWatch.
Much now will depend on the U.S. jobs data due later in the day and any upside surprise could price out the chance for a cut next month. Forecasts are centred on a rise of 110,000 in July, while the jobless rate likely ticked up to 4.2 per cent from 4.1 per cent.
The greenback found support from fading prospects of imminent U.S. rate cuts, with the dollar index up 2.5 per cent this week against its peers to 100, in the biggest weekly rise since late 2022.
The Canadian dollar was little impacted by the tariff news, having already fallen about 1 per cent this week to a 10-week low.
The yen was the biggest loser overnight, with the dollar up 0.8 per cent to 150.7 yen, the highest since late March. The Bank of Japan held interest rates steady on Thursday and revised up its near-term inflation expectations but Governor Kazuo Ueda sounded a little dovish in the press conference.
Treasuries were largely steady on Friday. Two-year Treasury yields were flat at 3.9510 per cent, while benchmark 10-year yields ticked up 2 basis points to 4.3781 per cent, after slipping 2 bps overnight.
In commodity markets, oil prices were little changed after falling 1 per cent overnight. U.S. crude rose 0.1 per cent to $69.36 per barrel, while Brent was at $71.8 per barrel, up 0.1 per cent.
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