Asian stocks struggle as traders eye Fed saga, trade war
HONG KONG : Asian markets fluctuated today after a rollercoaster day on Wall Street punctuated by fears Donald Trump was considering sacking the head of the US Federal Reserve (Fed).
Traders have walked a cautious line this week as they ascertain the trade outlook after the US president unveiled a flurry of fresh tariff threats, with the latest being letters to scores of countries notifying them of levies of up to 15%.
Meanwhile, Tokyo-listed shares in the Japanese owner of 7-Eleven plunged after its Canadian rival pulled out of an almost US$50 billion takeover bid, ending a long-running battle over the convenience store giant.
All three main indexes in New York ended in the green yesterday, with the Nasdaq at another record, following a brief sell-off that came after it emerged Trump had raised the idea of firing Fed boss Jerome Powell in a closed-door session with lawmakers.
The markets soon bounced back after Trump denied he was planning to do so, saying: 'I don't rule out anything, but I think it's highly unlikely'.
The news caused a spike in US Treasury yields amid fears over the central bank's independence and came after the president spent months lambasting Powell for not cutting interest rates, calling him a 'numbskull' and 'moron'.
'This Trump vs Powell saga is obviously important to market sentiment, and it seems fair to think Trump's series of social posts was strategically designed to gauge the reaction in markets – a trial balloon if you will,' said Chris Weston, head of research at Pepperstone.
'It seems that Trump indeed got his answers, and while (economic adviser) Kevin Hassett or any of the other names on the billing would be highly capable, the market has shown that it will take its pound of flesh if indeed Powell's dismissal were to become a reality,' Weston said.
The Fed issue came as investors were already digesting a series of trade war salvos from Trump in recent weeks that saw him threaten Brazil, Mexico and the EU with elevated tariffs if they do not reach deals before Aug 1.
He also flagged hefty levies on copper, semiconductors and pharmaceuticals, and while he reached an agreement with Indonesia on Tuesday, there are around two dozen more still unfinished.
Yesterday, Trump said he would send letters to more than 150 countries outlining what tolls they would face.
'We'll have well over 150 countries that we're just going to send a notice of payment out, and the notice of payment is going to say what the tariff' will be, he told reporters, adding they were 'not big countries, and they don't do that much business'.
He later told the Real America's Voice broadcast that the rate would 'be probably 10% or 15%, we haven't decided yet'.
Meanwhile, the Fed's 'Beige Book' survey of economic conditions pointed to increasing impacts from the tariffs, with many warning they passed along 'at least a portion of cost increases' to consumers and expected costs to remain elevated.
Asian markets struggled to build on Wall Street's lead.
Hong Kong, Shanghai and Taipei were flat, while Sydney, Singapore, Wellington and Jakarta rose, with losses seen in Seoul and Manila.
Tokyo was also down, with 7-Eleven owner Seven & i Holdings plunging more than 9% at one point after Canada's Alimentation Couche-Tard (ACT) withdrew its US$47 billion offer for the firm.
ACT released a letter sent to Seven & i's board, accusing it of 'a calculated campaign of obfuscation and delay'.
The decision ends a months-long saga that would have seen the biggest foreign buyout of a Japanese company, merging the 7-Eleven, Circle K and other franchises to create a global convenience store behemoth.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
44 minutes ago
- New Straits Times
Medicaid, Trump tax cuts 'kick off' 2026 campaign
RESIDENTS of Columbus, Indiana awoke last week to a yellow billboard purchased by the Democratic National Committee (DNC) blaring: "Under Trump's Watch, Columbus Regional Health is Cutting Medical Services." Meanwhile, the National Republican Congressional Committee (NRCC), which oversees races for the United States House of Representatives, last month launched a digital ad campaign touting President Donald Trump's tax cuts and blaming Democrats for spiking inflation. As members of Congress return to their home districts for the August recess, the Democratic and Republican parties are launching ad blitzes centred around the tax-cut and spending bill Trump signed into law on July 4, in an unofficial start to the 2026 midterm election campaign. Democrats are focusing their message around access to healthcare while Republicans are countering that the tax provisions will put more money in voters' pockets. The bill makes permanent Trump's 2017 tax cuts and funds his immigration enforcement crackdown, while reducing healthcare and food aid. It devotes US$170 billion to immigration enforcement while cutting US$1.1 trillion from Medicaid and other public health programmes and US$186 billion in food assistance. The nonpartisan Congressional Budget Office estimated that 10 million people would lose their health insurance by 2034 as a result of the bill, and that the tax provisions and increased immigration and military spending would increase the federal deficit by US$3.4 trillion over the next decade. Republican strategists say they have plenty of time to sell the bill's benefits. "We will use every tool to show voters that the provisions in this bill are widely popular," said Mike Marinella, a spokesman for the NRCC. And the party has a cash advantage. The Republican National Committee (RNC) had US$81 million in cash at the end of June, compared with the DNC's US$15 million during the same period. The RNC also enjoys a huge asset in a sitting president who is still holding fundraisers for big-ticket donors. Republicans can only afford a net loss of two of the 220 seats they hold in the House to maintain control. In the Senate, they have a 53-47 advantage. According to a Reuters/Ipsos poll, conducted last month, some 64 per cent of registered voters oppose cuts to Medicaid and food stamps in return for lower taxes for everyone. Democrats are seizing on that sentiment, pushing the idea that Republicans have taken away healthcare to pay for tax giveaways for billionaires. "Republicans threw working families under the bus to fund tax cuts for the wealthy, and we'll never let them — or voters — forget that," said DNC Deputy Communications Director Abhi Rahman in a statement. "This will define the midterms." Republicans say the bill's provisions on tips, overtime and Social Security show the party is focused on issues affecting working families. They also point to a US$50 billion fund the bill establishes to help rural hospitals. Another Republican strategy memo prepared by Trump's pollsters, urges candidates to "lead on kitchen-table issues." Democrats, meanwhile, are trying to tie Medicaid cuts to reduced healthcare access and higher costs. The DNC's website claims that the bill will "cost the poorest 10 per cent of households US$1,600 a year while raising the income of the richest 10 per cent of Americans by US$12,000 a year". Unrig Our Economy, a left-leaning group, is running ads in Iowa, Arizona and Pennsylvania depicting voters voicing frustration at their Republican lawmakers for voting for Trump's bill. "I'm so angry that Congresswoman Mariannette Miller-Meeks just voted for the largest cut to Medicaid in history to give tax breaks to billionaires," said one ad in Iowa, featuring a Davenport resident identified as Maria. Protect Our Care, a left-leaning healthcare advocacy organisation, said it planned to spend up to US$10 million on ads in the first half of next year, largely focused on urging Republican lawmakers to restore funding to Medicaid. Climate Power and the League of Conservation Voters spent US$500,000 on an ad pressuring lawmakers in six congressional districts to vote against the bill, claiming that it would increase electricity rates, according to its president, Pete Maysmith.
The Sun
3 hours ago
- The Sun
Smithsonian removes Trump impeachment display label
WASHINGTON: The Smithsonian's National Museum of American History removed a label referencing Donald Trump's two impeachments last month following pressure from the White House, The Washington Post reported. Trump is the only American president to have been impeached twice -- first in 2019 for abuse of power and obstruction of Congress, then in 2021 for inciting an insurrection. He was acquitted by the Senate both times. The label referencing his impeachments was introduced in 2021 to an exhibition about the American presidency at the Smithsonian, according to The Washington Post. The removal of the label 'came about as part of a content review that the Smithsonian agreed to undertake following pressure from the White House to remove an art museum director,' the Post wrote, citing a source not authorized to discuss the matter publicly. The exhibit has reverted to a 2008 label stating that 'only three presidents have seriously faced removal' -- referring to Andrew Johnson, Bill Clinton, and Richard Nixon, who resigned in 1974 before he could be impeached. The Smithsonian later said in a statement that 'a future and updated exhibit will include all impeachments,' the paper reported, without specifying when. Since starting his second term in January, the Republican president has moved to control major cultural institutions -- slashing arts and humanities funding, and cutting the National Park Service's budget. In March, Trump signed an executive order to 'restore the Smithsonian Institution to its rightful place as a symbol of inspiration and American greatness' and 'remove improper ideology.' The order accused the institution of having 'come under the influence of a divisive, race-centered ideology' and argued the shift has promoted narratives that portray American values as 'inherently harmful and oppressive.' In the order, Trump instructed Vice President JD Vance -- who sits on the Smithsonian's board -- to coordinate with Congress to ban funding for exhibits or programs that 'degrade shared American values, divide Americans by race, or promote ideologies inconsistent with Federal law.' He has also accused Washington's John F. Kennedy Center of being too 'woke,' fired its board members, and appointed himself chairman. - AFP
The Star
4 hours ago
- The Star
World economies reel from Trump's tariffs punch, but most South-East Asian countries rejoice thanks to kinder rates
SOUTH-EAST ASIA (AFP): Global markets reeled Friday from President Donald Trump's tariffs barrage against nearly all US trading partners as governments looked down the barrel of a seven-day deadline before higher duties take effect. Trump announced late Thursday that dozens of economies, including the European Union, will face new tariff rates of between 10 and 41 percent. However, implementation will be on August 7 rather than Friday as previously announced, the White House said. This gives governments a window to rush to strike bilateral deals with Washington setting more favorable conditions. Neighboring Canada, one of the biggest US trade partners, was hit with 35 percent levies, up from 25 percent, effective Friday -- but with current exemptions remaining in place. The tariffs are a demonstration of raw economic power that Trump sees putting US exporters in a stronger position while encouraging domestic manufacturing by keeping out foreign imports. But the muscular approach has raised fears of inflation and other economic fallout in the world's biggest economy. Stock markets in Hong Kong and London slumped as they digested the turmoil. Trump's actions come as debate rages over how best to steer the US economy, with the Federal Reserve this week deciding to maintain interest rates unchanged, despite massive political pressure from the White House to cut. Two Fed officials who dissented in Wednesday's decision warned Friday that the economy was being put at risk. Data Friday showed US job growth missing expectations for July, while unemployment ticked up to 4.2 percent from 4.1 percent. - Canada singled out - Trump raised duties on around 70 economies, from a current 10 percent level imposed in April when he unleashed "reciprocal" tariffs citing unfair trade practices. The new, steeper levels listed in an executive order vary by trading partner and go as high as 41 percent. Any goods "transshipped" through other jurisdictions to avoid US duties would be hit with an additional 40-percent tariff, the order said. The American leader separately singled out Canada for harsh tariffs. He had warned of trade consequences for Canada after Prime Minister Mark Carney announced plans to recognize a Palestinian state at the UN General Assembly in September. Trump's order cited Canada's failure to "cooperate in curbing the ongoing flood of fentanyl and other illicit drugs" -- although Canada is not a major source of illegal narcotics. Carney said his government was "disappointed" with the hike. Trump gave more time to neighbor and major trading partner Mexico, delaying for 90 days a threat to increase tariffs from 25 percent to 30 percent, after holding talks with President Claudia Sheinbaum. Exemptions remain for a wide range of Canadian and Mexican goods entering the United States under an existing North American trade pact. - 'Tears up' rule book - With questions hanging over the effectiveness of bilateral trade deals already struck -- including with the European Union and Japan -- the outcome of Trump's overall plan remains uncertain. "No doubt about it -- the executive order and related agreements concluded over the past few months tears up the trade rule book that has governed international trade since World War II," said Wendy Cutler, senior vice president of the Asia Society Policy Institute. "Whether our partners can preserve it without the United States is an open question," she added. Notably excluded from Friday's drama was China, which is in the midst of negotiations with the United States. Washington and Beijing at one point brought tit-for-tat tariffs to triple-digit levels, but both countries have agreed to temporarily lower these duties and are working to extend their truce. Beijing warned that US protectionism "harms the interests of all parties". "There is no winner in a tariff war or trade war," foreign ministry spokesman Guo Jiakun said. Those who managed to strike deals with Washington to avert steeper threatened levies included Vietnam, Japan, Indonesia, the Philippines, South Korea and the European Union. Among other tariff levels adjusted in Trump's latest order, Switzerland now faces a higher 39 percent duty. - AFP
