Asia-Pacific equities rebound on tariff relief as policy risks persist
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Asian equities began the week on firmer ground as a temporary exemption for Chinese electronics—including smartphones and computers—from the U.S. administration’s proposed 125% reciprocal tariffs triggered a broad-based risk rally. However, gains remain capped by ongoing policy ambiguity, with President Trump confirming that tariffs on semiconductors will be disclosed “within the week” and that smartphones could still face levies “soon.”
The Nikkei 225 advanced 1.90% to close at 34,012.88, regaining ground after a volatile previous week marked by erratic trade signals. The MSCI Asia-Pacific ex-Japan index rose 1.5%, partially retracing last week’s >4% drawdown. China’s CSI 300 gained 0.3%, supported by March export data showing a 12.4% YoY increase, attributed to pre-emptive shipment acceleration ahead of expected tariff enforcement.
On the derivatives side, S&P 500 futures (ES1!) rose 1.21%, Nasdaq futures (NQ1!) climbed 1.66%, and EURO STOXX 50 futures (FESX1!) jumped 1.95%, reflecting improved global sentiment. FTSE futures (Z1!) added 1.73%, while DAX futures rose 2.3%, pricing in follow-through from Friday’s U.S. equity strength, where the S&P 500 had rallied 5.7% WoW but remained 5.1% below its pre-April tariff highs.
Fixed income markets showed little sign of stabilization. The U.S. 10-year Treasury yield (US10Y) held at 4.47%, down 3 bps intraday but elevated after last week’s historic surge, which marked the largest weekly increase in yields in over two decades, driven by trade policy uncertainty and forced deleveraging.
Currency markets reflected growing concerns over U.S. macro stability. The USD/JPY pair traded at 143.17, just above last week’s six-month low of 142.05, while USD/CHF remained pinned at 0.8184, its lowest level in over a decade, having dropped more than 5% week-on-week. The EUR/USD pair remained stable at 1.1354, shy of the recent three-year high of 1.1474, with attention focused on Thursday’s ECB meeting, where a 25 bps rate cut to 2.25% is fully priced in.
Commodities exhibited a bifurcated response. Gold (XAUUSD) surged to a new all-time high at $3,245/oz, driven by safe-haven demand amid macro uncertainty and declining confidence in U.S. asset stability. In contrast, Brent crude (BRN1!) slipped $0.17 to $64.59/bbl, and WTI crude (CL1!) eased $0.15 to $61.35/bbl, weighed by concerns over slowing global demand and increased OPEC supply, partially offset by geopolitical tensions around Iranian exports.
Looking ahead, the macro focus intensifies. Key risk events this week include U.S. retail sales, China’s Q1 GDP print, and a speech by Fed Chair Jerome Powell on Wednesday, expected to address recent Treasury market disruptions and the implications for monetary policy normalization. Additionally, earnings from Goldman Sachs, Citigroup, Bank of America, and TSMC will provide further guidance on sector-specific impacts of trade policy and broader risk appetite.
Conclusion: While the electronics tariff reprieve has sparked a tactical rebound in global equities, the underlying risk premium remains elevated. Market participants should remain cautious as policy inconsistency, potential tariff reversals, and fragile Treasury market liquidity could reintroduce volatility. Positioning strategies should remain nimble, with close attention paid to upcoming central bank communication and corporate earnings as the next directional catalysts.
The Nikkei 225 advanced 1.90% to close at 34,012.88, regaining ground after a volatile previous week marked by erratic trade signals. The MSCI Asia-Pacific ex-Japan index rose 1.5%, partially retracing last week’s >4% drawdown. China’s CSI 300 gained 0.3%, supported by March export data showing a 12.4% YoY increase, attributed to pre-emptive shipment acceleration ahead of expected tariff enforcement.
On the derivatives side, S&P 500 futures (ES1!) rose 1.21%, Nasdaq futures (NQ1!) climbed 1.66%, and EURO STOXX 50 futures (FESX1!) jumped 1.95%, reflecting improved global sentiment. FTSE futures (Z1!) added 1.73%, while DAX futures rose 2.3%, pricing in follow-through from Friday’s U.S. equity strength, where the S&P 500 had rallied 5.7% WoW but remained 5.1% below its pre-April tariff highs.
Fixed income markets showed little sign of stabilization. The U.S. 10-year Treasury yield (US10Y) held at 4.47%, down 3 bps intraday but elevated after last week’s historic surge, which marked the largest weekly increase in yields in over two decades, driven by trade policy uncertainty and forced deleveraging.
Currency markets reflected growing concerns over U.S. macro stability. The USD/JPY pair traded at 143.17, just above last week’s six-month low of 142.05, while USD/CHF remained pinned at 0.8184, its lowest level in over a decade, having dropped more than 5% week-on-week. The EUR/USD pair remained stable at 1.1354, shy of the recent three-year high of 1.1474, with attention focused on Thursday’s ECB meeting, where a 25 bps rate cut to 2.25% is fully priced in.
Commodities exhibited a bifurcated response. Gold (XAUUSD) surged to a new all-time high at $3,245/oz, driven by safe-haven demand amid macro uncertainty and declining confidence in U.S. asset stability. In contrast, Brent crude (BRN1!) slipped $0.17 to $64.59/bbl, and WTI crude (CL1!) eased $0.15 to $61.35/bbl, weighed by concerns over slowing global demand and increased OPEC supply, partially offset by geopolitical tensions around Iranian exports.
Looking ahead, the macro focus intensifies. Key risk events this week include U.S. retail sales, China’s Q1 GDP print, and a speech by Fed Chair Jerome Powell on Wednesday, expected to address recent Treasury market disruptions and the implications for monetary policy normalization. Additionally, earnings from Goldman Sachs, Citigroup, Bank of America, and TSMC will provide further guidance on sector-specific impacts of trade policy and broader risk appetite.
Conclusion: While the electronics tariff reprieve has sparked a tactical rebound in global equities, the underlying risk premium remains elevated. Market participants should remain cautious as policy inconsistency, potential tariff reversals, and fragile Treasury market liquidity could reintroduce volatility. Positioning strategies should remain nimble, with close attention paid to upcoming central bank communication and corporate earnings as the next directional catalysts.