Shares steady, dollar firms on US tariff letters; oil dips
Shares on Wall Street fell after Trump sent letters to 14 countries, including Japan and South Korea, unveiling sharply higher tariffs on imports into the United States, while also postponing their implementation to August 1.
Japan's Nikkei stock gauge opened lower but then turned positive after Trump described that deadline as "firm, but not 100 per cent firm" and said tariffs may be adjusted for some countries. The Aussie dollar rose ahead of a Reserve Bank of Australia decision later in the day.
Market reaction to the tariff announcements was muted on memories of Trump's rapid walk back of his "Liberation Day" duties initially set out on April 2, said Tapas Strickland, head of market economics at National Australia Bank.
"There's going to be a lot of volatility as the headlines start to emerge, as more of these letters come out, and as the negotiations really come to the fore ahead of that August 1 deadline," Strickland said on an NAB podcast.
In April, Trump capped all of the so-called reciprocal tariffs with trading partners at 10 per cent until July 9 to allow for negotiations. Only two agreements, with Britain and Vietnam, have been reached. In June, Washington and Beijing agreed on a framework covering tariff rates, restoring a fragile truce in their trade war.
Tariffs on Japan and South Korea are now due to go up to 25 per cent on August 1. Japanese Prime Minister Shigeru Ishiba called the hike deeply regrettable and said his nation would continue negotiations with the U.S.
The European Union will not be receiving a letter setting out higher tariffs, EU sources familiar with the matter told Reuters on Monday. The EU still aims to reach a trade deal by Wednesday after European Commission President Ursula von der Leyen and Trump had a "good exchange," a commission spokesperson said.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 per cent in early trade. Japan's Nikkei stock index rose 0.4 per cent while South Korea's KOSPI jumped 1.5 per cent.
The dollar rose 0.2 per cent to 146.36 yen, touching a two-week high. The euro was flat at $1.1741. The Aussie advanced 0.4 per cent to $0.6516 before a meeting by the central bank where policymakers are widely expected to deliver a 25-basis-point cut.
U.S. crude dipped 0.5 per cent to $67.59 a barrel after surging nearly 2 per cent on Monday. Spot gold edged 0.2 per cent lower.
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