Asian stocks edged higher on Tuesday, as opposition on US President Donald Trump’s plan to seek tough tariffs on steel and aluminum imports grew, easing concerns over a potential trade war.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up by 1.4 percent to $572.74, after hitting four-day low on Monday.
Japan’s Nikkei 225 gained 1.7 percent to ¥21,400.50. The index marked a five-month loss and it lowest closing level since October in the previous day. TOPIX closed up 1.2 percent higher to ¥1,716.30.
South Korea’s KOSPI added 1.5 percent to ₩2,411.41. The country is expected to be greatly affected by Trump’s proposed tariffs, due to its large steel exports to the US.
Hong Kong’s Hang Seng index recovered from Monday’s 2.3 percent decline, raising 1.9 percent to HK$30,482.
The Shanghai Composite index increased 1 percent to CN¥3,289.67, while Shenzhen Composite climbed 1.1 percent to CN¥1,852.22.
Sales trader Oriano Lizza said the markets reacted with signs of fight, adding that investors were now relieving their worries over the US President’s tariff rule. Investors believed Trump’s unexpected announcement will not result to the strictest protectionist policies.
Investors will also be watching closely on the progress in Italy and the outlook for coalition talks that might start soon.
As Sunday’s elections hit a stalemate, Italian President Sergio Mattarella is expected to open coalition discussions in April, with the possibility of early voting, if no agreement is established.
Uncertainty Grows on Trump’s Planned Tariffs
The rally in Asia-Pacific equities followed gains in global stock markets, as the status of the proposed steel and aluminum tariffs became uncertain.
Since Trump’s sudden announcement of requiring tariffs of 10 percent on aluminum and 25 percent on steel last week, Republican policymakers and donors have publicly expressed their disapproval of the idea.
Among who have questioned the plan included House Speaker Paul Ryan, Republican Senator Orrin Hatch, groups backed by conservative donors the Koch Brothers, and advocacy group Club for Growth.
Spokeswoman for Ryan AshLee Strong said that they are extremely concerned over potential impacts of trade war and they are advising the White House to not continue with the plan.
Strong added that the new tax reform law has improved the economy and they definitely do not want to put those gains at risk.
Republicans had also stated that the stakes of the tariffs are too high for them to just sit back and wait for Trump to reconsider.
A trade war could weaken the global economy and cause severe consequences on the President’s political fortunes, if US shares and progress are threatened by retaliations from foreign authorities.
US allies, including Britain and Canada had also balked at the White House’s reasoning that their steel imports endangered US national security.
Trump has suggested that the tariffs were open for discussion and that he would not yield, noting that the US had lost $800 billion on trade. He also stated the tariffs will not be imposed if a fair North American Free Trade Agreement (NAFTA) is achieved.
The US President was expected to finalize the proposed tariffs later in the week, but some spectators familiar with the development said it might take place next week.
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