2025-04-03 11:27

April 3 (Reuters) - Foreign investors withdrew the largest amount of money from Asian equities in about 15 years in the quarter to March ahead of U.S. President Donald Trump's major tariffannouncement - and some say the region may see more selling as investors head for safe-haven assets. Overseas investors divested stocks worth a net $43.73 billion in India, Taiwan, South Korea, Thailand, Indonesia, Vietnam, and the Philippines in the quarter - the largest quarterly net sales since at least March 2010, LSEG data showed. Sign up here. On Wednesday, Trump introduced sweeping reciprocal tariffs on his country's trading partners, escalating a trade war that has heightened fears of a global economic slowdown, with particularly severe impacts on regional growth. "Asia bears the brunt of these tariffs, with China, South Korea, and Taiwan seeing significant increases compared to lower rates for LATAM. Specifically, China will face a 34% tariff on top of the existing 20%, resulting in an effective tariff rate of 54%, which is close to the 60% rate pledged during Trump's campaign," said Ray Sharma-Ong, head of multi-asset investment solutions, at Aberdeen Investments. In March alone foreigners offloaded a net $17.51 billion worth of the region's equities, the biggest net sales for a month since June 2022. Taiwan stocks witnessed a net $14.13 billion worth of monthly cross-border outflows last month, the highest since at least January 2008. South Korean stocks remained out of favor for an eighth successive month as foreigners divested local stocks worth a net $1.46 billion. Meanwhile, monthly foreign outflows from Indian equity markets cooled to a three-month low of $401 million last month. Foreign investors also sold Thai, Indonesian and Vietnamese stocks worth $647 million, $491 million and $426 million, respectively in the last month. "The hardest-hit regions, including China, South Korea, and Taiwan, are expected to experience further de-risking as investors move towards safe haven assets such as U.S. Treasuries, yen, and gold," said Aberdeen's Sharma-Ong. https://www.reuters.com/markets/trumps-trade-policies-triggered-largest-asian-equity-outflows-least-15-years-q1-2025-04-03/

2025-04-03 10:55

LONDON, April 3 (Reuters) - What matters in U.S. and global markets today By Mike Dolan , opens new tab, Editor-At-Large, Financial Industry and Financial Markets Sign up here. If you thought a global trade war was already priced into world markets, Thursday's reaction to the U.S. tariff sweep will be sobering. I'll get into all the details below and explain why this is just the beginning of what could be a very difficult ride. Today's Market Minute * President Donald Trump's move to impose sweeping tariffs on U.S. imports from allies and rivals alike sparked threats of retaliation on Thursday. * Markets are reeling after the new tariffs sent shockwaves through the financial world, with the dollar and U.S. stocks among the hardest hit on fears that a broadening trade war will unleash a recession. * "All this work for nothing." Trump's global tariffs are creating an all-round blockade that is hurting Chinese businesses, large and small. * This latest round of tariffs will sap yet more vigor from a world economy that has barely recovered from the post-pandemic inflation surge and is weighed down by record-high debt and unnerved by geopolitical strife. * He calls it "Liberation Day", but Trump's gamble on global tariffs could cause political headwinds for his party and economic pain for his constituents if his promises to recast the economy do not work out. Trepidation Day Some thought Wall Street would embrace the much-hoped for clarity offered by Trump's tariff announcement, but they were wrong. Wall Street stock futures have plummeted more than 3% overnight on the combination of a 10% universal tariff on all U.S. imports and reciprocal tariffs on top of that for many countries, heavily concentrated in China and Asia. China now faces a combined 54% tariff rate when factoring in earlier moves. European Union imports are set to be hit with 20% tariffs, with 24% planned for Japan and 10% for Britain. Canada and Mexico are not currently subject to reciprocal tariffs because Trump's prior 25% fentanyl and immigration-related tariffs will stay in place. The moves appear to have been decided using relatively crude calculations of goods trade deficits with the United States, something that rankled many investors given the amount of time taken to construct the plan. Countries affected around the world said they would now examine retaliatory measures, with the EU proposing its own tariffs. There are also reports suggesting the bloc is considering additional fiscal supports for the worst-affected sectors. Overall, Deutsche Bank estimates the average tariff rate on U.S. imports could now rise to 25-30% - the highest in more than 100 years and above most expectations. Stock and bond markets reflected investor concerns about the tariffs' potentially damaging impact on U.S. and world growth. S&P futures were down 3.1% ahead of Thursday's open, with futures on the Russell 2000 down over 4%, worse than the 2.7% hit in Tokyo (.N225) , opens new tab and the losses of more than 1% in Europe (.STOXXE) , opens new tab and Hong Kong (.HSI) , opens new tab. The VIX (.VIX) , opens new tab 'fear index' of Wall Street stock volatility climbed three points to 26, back to levels seen a month ago when U.S. stocks were falling sharply. Treasury yields plummeted, with the 10-year down about 15 basis points to 6-month lows, testing 4% at one point. But currency moves were less intuitive, with the dollar (.DXY) , opens new tab tracking Treasury yields to slide to its lowest since October. It eyed its biggest one-day hit since 2023. This was somewhat surprising given that tariffs were expected by many to be more damaging to overseas economies, which would typically lift the dollar. Several reasons have been suggested for this move. One is that the American economy may feel a bigger initial hit than the rest of the world due to the scale of the new average U.S. trade barriers, especially if fiscal measures abroad kick in alongside retaliatory tariffs. That's lifted the euro . Another is a dash for the yen's 'safe haven' status. And Canada's dollar and Mexico's peso also rose on the assumption that they have escaped the worst-case scenario for now. China's yuan was weaker, but that was limited by state bank buying and officials setting the onshore reference rate higher. The dollar's losses may also simply be due to the fact that foreign investors in U.S. assets are resuming their exit from America's markets, which we saw in the first quarter. In other news, Tesla's stock (TSLA.O) , opens new tab overnight lost most of Wednesday's 5% gains that were based on reports that its boss Elon Musk would soon step back from his government advisory role, reports Musk and the White House dismissed. I'll now turn back to today's main story and discuss why the much-heralded "Liberation Day" announcement has liberated no one from uncertainty. The real tariff uncertainty starts now Whatever you make of the sweeping tariff plan U.S. President Donald Trump dropped on Wednesday, remember that the real uncertainty about the potential economic damage only starts now. Relief at getting some clarity on Wednesday was understandable. But we still have no hard evidence of just how these measures will directly affect corporate and household decision-making, or exactly how countries will retaliate. And Trump's tariff strategy is clearly to keep everyone guessing about the eventual targets, the size of the levies and the duration. Indeed, the White House has already factored in more uncertainty, with Trump and his officials acknowledging that the road ahead will be bumpy. So the idea that the fog will all dissipate in weeks or even months seems hopeful at best. While there aren't many overarching measures of "uncertainty" per se, the ones that relate to U.S. trade are off the charts. Before Wednesday's big reveal, there was a huge spike in the U.S. trade component of the Economic Policy Uncertainty Index, which is based on the news sentiment model devised by Baker, Bloom and Davis. It is currently reflecting the discombobulation many CEOs, business leaders and families are feeling when planning large purchases. The measure was already at a record high in February, exceeding the peaks of the first Trump term. But the March reading saw it more than double over the month - to more than twice the 2019 peak and almost 30 times the level recorded just before last November's election. The market fallout has been slightly less hyperbolic, but still saw Wall Street's worst start to the year since the pandemic. It's possible the trade uncertainty gauge might drop a bit now that details of Trump's plans have emerged. But so much is still unknown that it's hard to see the index returning to normal levels anytime soon. Because even if you think Trump's goals are a long-term positive, by wringing trade concessions overseas and returning factory jobs to America, it could take years to achieve that and painful adjustments in the interim. What investors are now trying to do is gauge the immediate impact, any potentially offsetting U.S. policy actions and the reactions of governments abroad. BADLY DRAWN For many U.S.-based money managers, including long-bruised 'value' investing funds that have enjoyed a rare cheer this year, not much draws them back to U.S. stocks as Trump pushes ahead with plans to reorder the global trade landscape. The latest investment letter from Boston-based GMO's Ben Inker and John Pease was scathing about the tariff policy. They remained fretful about the outlook for expensive U.S. stocks, while showing particular disdain for corporate 'junk' debt that's still offering historically low risk premia. They also developed a rule-of-thumb that the dollar should appreciate by about a third of the overall tariff increases, absent overseas retaliation. "While it might seem like the current period of uncertainty should end quickly once the administration finalizes their proposals, the poorly designed nature of many of these policies makes it hard to have confidence that they will last in their current form," they wrote. They cited copper tariffs as an example of how the whole scheme could rebound and potentially crater U.S. returns and investment without achieving the mooted goals. "Taking the goal of increased domestic production of copper as a given, imposing a large tariff on imported copper now seems an inefficient and costly way to achieve it," they said. Copper mines take years to develop before they can produce any metal. In the meantime, all that happens is that the cost of copper in America rises substantially higher than elsewhere in the world. They acknowledged that substantial tariffs on copper imports may incentivize investment in U.S. copper mines, but only if those tariffs are expected to last. A mine could run for decades, so uncertainty about the duration of the tariffs will reduce the incentive to invest today, they said. Another disincentive would be the risk that a future administration removes the tariff or perhaps offers subsidies instead. "A big part of the problem with badly designed policies is that they are less likely to stick even when enacted with great fanfare." Overall, Inker and Pease see rough times ahead for U.S. markets, arguing that the combined impact of tariffs, a stronger dollar, and weaker consumption is a net negative for the average U.S. stock. "Tariff risk, piled on top of the notoriously high valuations of U.S. companies, makes the American stock market a hard pitch," they concluded. "And yet you could do worse. All you would have to do is buy some U.S. corporate credit." So much for American exceptionalism. Chart of the day The heat map of where the Trump tariff sweep will hit is clearly hottest in Asia. Not only does China face a combined levy on its goods of 54% - close to the 60% Trump promised in his election campaign - but many so-called "China+1" countries, who had benefited from re-routed Chinese trade to America, are now being heavily hit as well. Vietnam faces 46% levies, Thailand 36%, South Korea 25% and India 26%. Importantly, many U.S. firms also manufacture goods in these countries. For example, Nike produced 50% of its footwear and 28% of its apparel in Vietnam in its 2024 financial year. Today's events to watch * U.S. March layoffs, weekly jobless claims, February international trade balance, March service sector surveys from ISM and S&P Global; Canada February trade balance * Federal Reserve Vice Chair Philip Jefferson and Fed Board Governor Lisa Cook speak; European Central Bank Vice President Luis de Guindos speaks * U.S. corporate earnings: Exxon Mobil, Lamb Weston, Conagra Brands Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles , opens new tab, is committed to integrity, independence, and freedom from bias. https://www.reuters.com/markets/us/global-markets-view-usa-2025-04-03/

2025-04-03 10:52

S&P 500 down more than 4% in afternoon trading Dollar down against euro, yen Safe-haven bonds rally NEW YORK/LONDON, April 3 (Reuters) - Stock indexes tumbled on Thursday, with the S&P 500 down more than 4%, while the U.S. dollar weakened and oil prices fell more than 6% as President Donald Trump’s drastic U.S. trade tariffs stoked fears of a global recession and led investors to seek safe-haven assets like bonds and the yen. A new baseline 10% tariff on imported goods plus some eye-watering reciprocal tariffs on dozens of countries that Trump said had unfair trade barriers left traders rattled by their severity. Sign up here. Investors fear a full-blown trade dispute could trigger a sharp global economic slowdown and drive up inflation, with the latest round of U.S. trade tariffs hitting a world economy barely recovered from the post-pandemic inflation surge and dealing with geopolitical strife. The euro rallied 1.53% against the dollar. Against the Japanese yen , the dollar weakened 2.07% to 146.15. The Nasdaq was down more than 5%, with technology-related shares among the day's biggest drags. Apple (AAPL.O) , opens new tab fell 9.2%, hit by the tariffs on China - the base for much of its manufacturing. Amazon.com (AMZN.O) , opens new tab was down 7.9%, Microsoft (MSFT.O) , opens new tab was off 1.5%, and Nvidia (NVDA.O) , opens new tab was down 6.9%. The losses come after trillions off dollars were already wiped off the "Magnificent Seven" tech giants this year as worries have mounted. The CBOE Volatility index (.VIX) , opens new tab, known as Wall Street's fear gauge, touched a three-week high at 26.91 points. The S&P 500 energy sector (.SPNY) , opens new tab was down more than 6% as oil prices sank. "This is just another chapter of the market in a bottoming process," said Bruce Zaro, managing director at Granite Wealth Management in Plymouth, Massachusetts. Investors are adjusting their outlook partly based on the potential impact of tariffs on corporate earnings, he said, adding, "What we have already seen and are going to continue to see are drastic reductions in earnings estimates. That's going to play out and drag on for some time." The Dow Jones Industrial Average (.DJI) , opens new tab fell 1,317.59 points, or 3.12%, to 40,909.33, the S&P 500 (.SPX) , opens new tab fell 227.17 points, or 4.01%, to 5,443.80 and the Nasdaq Composite (.IXIC) , opens new tab fell 912.44 points, or 5.18%, to 16,688.61. MSCI's gauge of stocks across the globe (.MIWD00000PUS) , opens new tab fell 23.64 points, or 2.83%, to 812.47. RECIPROCAL LEVY In Europe, the 27-country EU bloc now faces a 20% reciprocal levy. The pan-European STOXX 600 (.STOXX) , opens new tab index fell 2.57%. Trump's levies impacted Asia particularly hard. China was hit with a 34% reciprocal tariff, Japan 24%, South Korea 25% and Vietnam 46%. Vietnamese stocks (.VNI) , opens new tab slumped 6.7% in response. The Nikkei 225 index (.N225) , opens new tab fell 2.8%. "This is how you sabotage the world’s economic engine while claiming to supercharge it," said Nigel Green, CEO of global financial advisory deVere Group. Vietnam's Prime Minister Pham Minh Chinh pledged to maintain the country's economic growth target of at least 8% for this year, despite the U.S. imposing its hefty tariff on the Southeast Asian nation's exports. The scramble for ultra-safe government bonds that provide a guaranteed income drove down U.S. Treasury yields. The yield on the benchmark U.S. 10-year Treasury note fell 15.3 basis points to 4.042% after falling to a 4.004%, its lowest since October 16. The yield on the note was on track for its biggest daily drop since August 2. Euro area government bond yields dropped, with Germany's 10-year yield , the euro area's benchmark, down 7.5 bps at 2.65%, after hitting 2.625%, its lowest since March 4. If the tariffs trigger recessions, central banks around the world are likely to slash interest rates, which benefit bonds. Credit rating agency Fitch warned they were a "game-changer" for the U.S. and global economy, while Deutsche Bank called them a "once in a lifetime" moment that could knock between 1%-1.5% off U.S. growth this year. "Many countries will likely end up in a recession," said Fitch's head of U.S. economic research, Olu Sonola. "You can throw most forecasts out the door if this tariff rate stays on for an extended period of time." Shortly afterwards, Fitch downgraded China's credit rating, citing the steep U.S. tariffs as a reason. Oil prices dropped, with U.S. crude down 6.5% at $67.05 a barrel and Brent at $70.27 per barrel, down 6.24% on the day. Gold hit a record high above $3,160 an ounce before running out of steam. Spot gold was down 0.85% at $3,106.99 an ounce. https://www.reuters.com/markets/global-markets-pix-2025-04-03/

2025-04-03 10:50

NAIROBI, April 3 (Reuters) - The Kenyan, Nigerian, Ghanaian and Zambian currencies are forecast to remain broadly steady against the dollar in the next week to Thursday, while Uganda's shilling is expected to strengthen, traders said. KENYA Kenya's shilling is expected to be stable, with importer dollar demand low, traders said. Sign up here. Commercial banks quoted the shilling at 129.00/50 per dollar, compared with last Thursday's close of 129.10/129/60. NIGERIA Nigeria's naira is seen holding steady against the dollar in the coming week, buoyed by central bank dollar sales and investor confidence. The naira was quoted around 1,530 to the dollar in intraday trading on Thursday, compared with a closing quote of 1,540 naira a week earlier. The unit was sold at 1,550 naira to the dollar in street trading on Thursday. "We see the naira's relative stability continuing, especially after the central bank reported a positive net reserve position, which has significantly boosted market confidence," one trader said. GHANA Ghana's cedi is expected to hold largely steady at current levels next week on matched demand and supply of dollars on the interbank market. LSEG data showed the cedi trading at 15.45 per dollar on Thursday, the same as last Thursday's close. "Cedi remained stable against the US dollar this week, showing no significant movement as demand and supply remained well-balanced. This stability reflects the effectiveness of current market dynamics and interventions," Chris Nettey, head of trading at Stanbic Bank Ghana, said. Sedem Dornoo, a senior trader at Absa Bank Ghana, said given the current strong liquidity to meet corporate demands, the cedi could gain as some traders increase their shorts. UGANDA The Ugandan shilling is expected to strengthen, helped by dollar inflows from coffee exports and weak importer demand. Commercial banks quoted the shilling at 3,639/3,649 Thursday, compared with last Thursday's close of 3,660/3,670. "Coffee is bringing in quite a large amount of inflows because of the high international prices," said an independent foreign exchange trader. Uganda's earnings from coffee exports have been soaring on high international prices. ZAMBIA Zambia's kwacha is expected to hold steady against the dollar next week supported by companies preparing to pay taxes. On Thursday, the currency of Africa’s second largest copper producer was quoted at 27.98 per dollar from 28.75 a week ago. "We have Pay As You Earn due next week and this is a huge tax," one financial analyst said. https://www.reuters.com/markets/currencies/africa-fx-most-african-currencies-seen-stable-ugandas-shilling-firm-2025-04-03/

2025-04-03 10:27

MUMBAI, April 3 (Reuters) - The rupee closed modestly stronger on Thursday, aided by a broadly weaker dollar and inflows as markets grappled with the impact of sweeping U.S. reciprocal tariffs and their impact on global trade and growth dynamics. India is facing a relatively softer levy of 27% than regional peers such as China, Vietnam and Thailand, which also was a sentimental positive for the currency. Sign up here. The local unit closed at 85.43 against the U.S. dollar, compared to the close of 85.4975 in the previous session. It had declined to a low of 86.75 in early trading, but broad-based interbank offers, including those spurred by likely custodial inflows, helped it trim losses, an FX trader at a bank said. Additionally, a more than 1% plunge in the dollar index - the greenback's safe-haven appeal dulling due to concerns about how trade policy may impact U.S. growth - helped out the rupee. Asian currencies kicked off the day on a weaker note, but most trimmed or reversed losses. The offshore Chinese yuan was last quoted at 7.30, retreating from a peak of 7.34. Despite the initial reaction, analysts reckon that Asian currencies are not out of the woods yet. "Asian currencies may face increased depreciation pressure as markets turn risk-averse, affecting foreign institutional investor (FII) inflows," ING Bank said in a note. On the day, Indian equities fared better than their regional peers with the benchmark Nifty 50 index (.NSEI) , opens new tab closing 0.3% lower while Hang Seng fell 1.5% and Vietnamese stocks were down over 6%. Futures indicated that U.S. equities were primed to open in the red, and the dollar index hit a six-month low. Other safe-havens such as the Japanese yen and Swiss franc soared. "(I) think it is more of a USD-losing-reserve-currency-status story at the moment," a Singapore-based trader at a bank said, referring to how FX markets reacted to the announcement of reciprocal tariffs. For its part, India on Tuesday said was studying the impact of U.S. tariffs and vowed to push for a trade deal this year. https://www.reuters.com/markets/currencies/relatively-lower-tariff-hit-slumping-dollar-helps-rupee-hold-ground-2025-04-03/

2025-04-03 10:13

DUBLIN, April 3 (Reuters) - Targeting U.S. digital services in potential reciprocal trade measures is not the European Union's position and would be very damaging for Ireland, trade minister Simon Harris said on Thursday, urging negotiations. Harris was responding to comments from a French government spokesperson that services, notably digital services, were likely to be a focus of EU measures considered in response to new U.S. tariffs. Many U.S. tech giants have their EU headquarters in Ireland. Sign up here. "That's not the position of the European Union. Different countries may have different perspectives, but the position of the European Union is outlined by the Commission president this morning," Harris told national broadcaster RTE. "I can understand why countries reference the instruments that are at our disposal, should they be required, but we should really work to avoid ever getting to that point... The position has to be negotiate to a better level and I am confident that that's where the very significant majority perspective is," Harris said. https://www.reuters.com/markets/europe/retaliating-against-us-digital-services-not-eu-position-ireland-says-2025-04-03/