Asia shares fall as US unleashes fresh tariffs
Late on Thursday, President Donald Trump signed an executive order imposing tariffs ranging from 10 per cent to 41 per cent on US imports from dozens of countries and foreign locations. Rates were set at 25 per cent for India's US-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 US-Mexico-Canada trade agreement, but gave Mexico a 90-day reprieve from higher tariffs to negotiate a broader trade deal.
"At this point, the reaction in markets has been modest, and I think part of the reason for that is the recent trade deals with the EU, Japan, and South Korea have certainly helped to cushion the impact," said Tony Sycamore, analyst at IG.
"After being obviously caught on the wrong foot in April, the market now, I think, has probably taken the view that these trade tariff levels can be renegotiated, can be walked lower over the course of time."
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 per cent, bringing the total loss this week to 1.5 per cent. South Korea's KOSPI tumbled 1.6 per cent while Japan's Nikkei dropped 0.6 per cent.
EUROSTOXX 50 futures dropped 0.5 per cent. Nasdaq futures fell 0.5 per cent while S&P 500 futures slipped 0.3 per cent after earnings from Amazon failed to live up to lofty expectations, sending its shares tumbling 6.6 per cent after hours.
Apple, meanwhile, forecast revenue well above Wall Street's estimates, following strong June-quarter results supported by customers buying iPhones early to avoid tariffs. Its shares were up 2.4 per cent after hours.
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 initial 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 US jobs data due later in the day and any upside surprise could lower 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 has found support from fading prospects of imminent US rate cuts, with the dollar index up 2.4 per cent this week against its peers to 100, the highest level in two months. That is its biggest weekly rise since late 2022.
The Canadian dollar was little impacted by the tariff news, having already fallen about 1.0 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 expectation but Governor Kazuo Ueda sounded a little dovish.
Treasuries were largely steady on Friday. Benchmark 10-year US Treasury yields ticked up one basis point to 4.374 per cent, after slipping two bps overnight.
In commodity markets, oil prices were steady after falling 1.0 per cent overnight. US crude rose 0.1 per cent to $US69.36 ($A107.89) per barrel, while Brent was at $US71.84 ($A111.75) per barrel, up 0.2 per cent.
Spot gold prices were steady at $US3,288 ($A5,115) an ounce.
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The Advertiser
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- The Advertiser
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The country's state refiners - Indian Oil Corp, Hindustan Petroleum Corp, Bharat Petroleum Corp and Mangalore Refinery Petrochemical Ltd - have not sought Russian crude in the past week or so, four sources familiar with the refiners' purchase plans told Reuters. On July 14, Trump threatened 100 per cent tariffs on countries that buy Russian oil unless Moscow reaches a major peace deal with Ukraine. Russia is the top supplier to India, responsible for about 35 per cent of India's overall supplies. Russia continued to be the top oil supplier to India during the first six months of 2025, accounting for about 35 per cent of India's overall supplies, followed by Iraq, Saudi Arabia and the United Arab Emirates. India, the world's third-largest oil importer and consumer, received about 1.75 million barrels per day of Russian oil in January-June this year, up one per cent from a year ago, according to data provided to Reuters by sources. 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On Friday, Trump told reporters that he had heard India would no longer be buying oil from Russia. The New York Times on Saturday quoted two unnamed senior Indian officials as saying there had been no change in Indian government policy, with one official saying the government had "not given any direction to oil companies" to cut back imports from Russia. Reuters reported this week that Indian state refiners stopped buying Russian oil in the past week after discounts narrowed in July. "On our energy sourcing requirements ... we look at what is there available in the markets, what is there on offer, and also what is the prevailing global situation or circumstances," India's foreign ministry spokesperson Randhir Jaiswal told reporters during a regular briefing on Friday. Jaiswal said India had a "steady and time-tested partnership" with Russia, and that New Delhi's relations with various countries stood on their merit and should not be viewed from the prism of a third country. The White House did not immediately respond to requests for comment. Indian refiners are pulling back from Russian crude as discounts shrink to their lowest since 2022, when Western sanctions were first imposed on Moscow, due to lower Russian exports and steady demand, sources said earlier this week. The country's state refiners - Indian Oil Corp, Hindustan Petroleum Corp, Bharat Petroleum Corp and Mangalore Refinery Petrochemical Ltd - have not sought Russian crude in the past week or so, four sources familiar with the refiners' purchase plans told Reuters. On July 14, Trump threatened 100 per cent tariffs on countries that buy Russian oil unless Moscow reaches a major peace deal with Ukraine. Russia is the top supplier to India, responsible for about 35 per cent of India's overall supplies. Russia continued to be the top oil supplier to India during the first six months of 2025, accounting for about 35 per cent of India's overall supplies, followed by Iraq, Saudi Arabia and the United Arab Emirates. India, the world's third-largest oil importer and consumer, received about 1.75 million barrels per day of Russian oil in January-June this year, up one per cent from a year ago, according to data provided to Reuters by sources. Nayara Energy, a major buyer of Russian oil, was recently sanctioned by the European Union as the refinery is majority-owned by Russian entities, including oil major Rosneft. In July, Reuters reported that Nayara's chief executive had resigned after the imposition of EU sanctions and company veteran Sergey Denisov had been appointed as CEO. Three vessels laden with oil products from Nayara Energy have yet to discharge their cargoes, hindered by the new EU sanctions on the Russia-backed refiner, Reuters reported in July. India will keep purchasing oil from Russia despite US President Donald Trump's threats of penalties, two Indian government sources say, not wishing to be identified due to the sensitivity of the matter. "These are long-term oil contracts," one of the sources said. "It is not so simple to just stop buying overnight." Trump indicated in a Truth Social post in July that India would face additional penalties for purchases of Russian arms and oil. On Friday, Trump told reporters that he had heard India would no longer be buying oil from Russia. The New York Times on Saturday quoted two unnamed senior Indian officials as saying there had been no change in Indian government policy, with one official saying the government had "not given any direction to oil companies" to cut back imports from Russia. Reuters reported this week that Indian state refiners stopped buying Russian oil in the past week after discounts narrowed in July. "On our energy sourcing requirements ... we look at what is there available in the markets, what is there on offer, and also what is the prevailing global situation or circumstances," India's foreign ministry spokesperson Randhir Jaiswal told reporters during a regular briefing on Friday. Jaiswal said India had a "steady and time-tested partnership" with Russia, and that New Delhi's relations with various countries stood on their merit and should not be viewed from the prism of a third country. The White House did not immediately respond to requests for comment. Indian refiners are pulling back from Russian crude as discounts shrink to their lowest since 2022, when Western sanctions were first imposed on Moscow, due to lower Russian exports and steady demand, sources said earlier this week. The country's state refiners - Indian Oil Corp, Hindustan Petroleum Corp, Bharat Petroleum Corp and Mangalore Refinery Petrochemical Ltd - have not sought Russian crude in the past week or so, four sources familiar with the refiners' purchase plans told Reuters. On July 14, Trump threatened 100 per cent tariffs on countries that buy Russian oil unless Moscow reaches a major peace deal with Ukraine. Russia is the top supplier to India, responsible for about 35 per cent of India's overall supplies. Russia continued to be the top oil supplier to India during the first six months of 2025, accounting for about 35 per cent of India's overall supplies, followed by Iraq, Saudi Arabia and the United Arab Emirates. India, the world's third-largest oil importer and consumer, received about 1.75 million barrels per day of Russian oil in January-June this year, up one per cent from a year ago, according to data provided to Reuters by sources. Nayara Energy, a major buyer of Russian oil, was recently sanctioned by the European Union as the refinery is majority-owned by Russian entities, including oil major Rosneft. In July, Reuters reported that Nayara's chief executive had resigned after the imposition of EU sanctions and company veteran Sergey Denisov had been appointed as CEO. Three vessels laden with oil products from Nayara Energy have yet to discharge their cargoes, hindered by the new EU sanctions on the Russia-backed refiner, Reuters reported in July. India will keep purchasing oil from Russia despite US President Donald Trump's threats of penalties, two Indian government sources say, not wishing to be identified due to the sensitivity of the matter. "These are long-term oil contracts," one of the sources said. "It is not so simple to just stop buying overnight." Trump indicated in a Truth Social post in July that India would face additional penalties for purchases of Russian arms and oil. 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7 hours ago
- Sky News AU
Donald Trump unhappy with grim US jobs report
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Sydney Morning Herald
10 hours ago
- Sydney Morning Herald
The $8.6 trillion bank tweak that risks sparking the next financial crisis
Part of this is intentional and means banks around the world have an extra, easy-to-calculate buffer on top of the framework of other capital requirements that are linked to risk. However, America's biggest banks say the crude calculation stops them from snapping up US Treasuries during times of stress because doing so comes at too high a price. J.P. Morgan boss Jamie Dimon has warned that this blunt instrument means US Treasuries are branded 'far riskier' than the reality. 'These rules effectively discourage banks from acting as intermediaries in the financial markets – and this would be particularly painful at precisely the wrong time: when markets get volatile,' he wrote in his annual letter to shareholders. Scope for change US Treasury Secretary Scott Bessent is pushing for change and has claimed that tweaking Treasuries could drive US borrowing costs down, helping the world's biggest economy to service its mountain of debt. More importantly, it could help support US bonds at a time when foreign investors are increasingly losing faith. Ken Rogoff, the former chief economist at the International Monetary Fund, agrees that there's scope for change. He says: 'It is very hard to give a clear rationale for the SLR, which is essentially an extremely crude way to stop banks from over-leveraging and has led to all kinds of distortions in the market because large global banks can no longer perform simple arbitrage functions as they used to do.' Jerome Powell, the Federal Reserve chief who is currently at war with Trump over interest rates, is singing from the same hymn sheet as the president, describing it as 'prudent' to reconsider the rule given the growth in safe assets on bank balance sheets over the past decade. And so it begins. In June, the Fed proposed rule changes that would move away from a crude approach and instead tie the amount of capital banks must set aside to how important it is to the global financial system. The Fed also left the door open to bigger changes that would completely exclude low-risk assets such as Treasuries and central bank deposits from the leverage ratio calculation – as was the case during the pandemic – and invited feedback on whether this could be done as an 'additional modification'. As it stands, the changes are set to free up an extra $US5.5 trillion ($8.6 trillion) on bank balance sheets that can be put to work. The Fed estimated that capital requirements at the deposit-taking arms of the biggest banks would fall by an average of 27 per cent. However, the move to change the SLR and return to pre-crisis rules has proved highly controversial for those who lived through the last financial meltdown. Sheila Bair, who used to run the Federal Deposit Insurance Corporation (FDIC), which insures savers against losses in the event of a bank failure, warns that such a move is storing up trouble for the future. Loading After all, the collapse of Silicon Valley Bank (SVB) in the US and the firesale of its UK subsidiary to HSBC in 2023 was rooted in the SVB's purchases of US Treasuries. SVB had kept a large portion of depositors' cash in Treasuries, but as interest rates surged in the months leading up to its collapse, the value of these Treasuries plunged. The crisis that followed Liz Truss' mini-budget was also a crisis sparked by turmoil in the gilt market. 'Such a huge reduction will increase the risk of a [major] bank failure, exposing the economy to credit disruptions and exposing the FDIC and banking system to substantial losses,' Bair warns. 'I led the FDIC during the 2008 financial crisis and remember well how insured banks, with their higher capital requirements, ended up being a source of strength for the holding companies, not the other way around. 'The idea that somehow this freed-up capital will ... make its way back down to the insured banks in a crisis isn't grounded in reality.' Bair isn't the only one who's expressed concern. Fed governor Michael Barr, who served as the central bank's top bank regulator before stepping down in the face of pressure from the Trump administration, warned that the central bank's proposals would 'significantly increase' the risk of a big bank failure. Bair's big fear is that the money won't end up being funnelled back into boring bonds at all, but end up lining shareholders' pockets or in more exotic investments. She says: 'Banks will likely find a way to distribute some of it to shareholders, or otherwise deploy it into their market operations which are riskier and more vulnerable to crisis conditions than insured banks.' COVID buffer Those who back removing Treasuries from the calculations highlight that it was done during the pandemic without much fanfare as banks ploughed more money into bonds. However, analysts at Morgan Stanley have highlighted that this was in part a function of a 21 per cent jump in bank deposits as workers had nowhere to spend their cash during lockdowns. Morgan Stanley recently noted: 'The COVID-related surge in deposits means that 2020-21 is not comparable with today's environment, as deposit growth is tepid at 1 per cent year on year. Deposit growth, combined with loan demand, are key drivers of bank demand for securities as banks will prefer to use deposits to support client lending activity and build client relationships.' Loading Bair says capital buffers were put there for a reason. 'If there should be a future crisis, regulators have the authority to provide emergency temporary relief,' she says. '[If they] reduce capital requirements now, they don't know how banks may deploy it. Better to maintain strong requirements in good times so capital cushions will be there when bad times hit.' British regulators are also keeping a close eye on things amid concerns the UK is moving towards a world where sovereign risk is completely removed from the leverage ratio. While the UK has already taken steps to remove central bank reserves from its calculations, officials believe removing government bonds would be a step too far. Rogoff, now a Harvard professor, agrees that capital buffers have served their purpose during times of crisis.
