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Donald Trump pauses tariff: How global markets reacted to US president's move
US President Donald Trump delayed the start of tariffs on neighbors Mexico and Canada for a month Monday -- but China remained in the firing line for levies
US President Donald Trump on Tuesday agreed to a 30-day pause on his tariff threats against Mexico and Canada. The decision led to a surge in US equity futures while the dollar reversed gains on Mexico's peso and Canadian dollar.
According to a Reuters report, the S&P Futures rose 0.4 per cent on Tuesday. The euro went on a white-knuckle ride to $1.0125 before roaring back to $1.0320 within 24 hours.
Tensions appeared higher between the United States and Canada -- but after two calls with Trudeau, Trump said on Truth Social that Canada had “agreed to ensure we have a secure Northern Border, and to finally end the deadly scourge of drugs like Fentanyl.”
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Hong Kong market up 2.5%
Hong Kong's Hang Seng was up 2.5%, even though an additional 10% tariff was due to hit Chinese goods from 0501 GMT, with electric vehicle makers leading the charge, the Reuters report added.
Li Auto emerged as the top gainer in Hong Kong, with an 8% rise while shares in semiconductor maker SMIC rose more than 7% to a record high.
"We understand Trump is still using the same strategy or tactic - launching very threatening tariffs, but leaving room for negotiation," Steven Leung, who handles institutional trading at stockbroker UOB-Kay Hian in Hong Kong, told Reuters.
“It all makes us feel that it's not a very firm policy yet. No need to worry too much,” he added.
European futures up by 0.2%
According to the Reuters report, European equity futures rose by a more cautious 0.2%. Oil, which had jumped, slipped and at $75.46 Brent crude futures were near to a one-month low. On the other hand, Bitcoin which had sunk close to $91,000 a day earlier, traded around $102,000.
"I think you see what we should get very used to, which is this kind of rollercoaster of public negotiation around tariffs and other policy," Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky, said.
Australian shares advanced 0.4% and Japanese stocks rose 1.7%, though gains were smaller than Monday's losses as trade-war fears swept financial markets.
Chinese markets remain shut for the Lunar New Year break, though the offshore yuan has climbed back to 7.3112 per dollar from as weak as 7.3765.
The Australian dollar stood at $0.6206 after sinking as low as $0.6088 on Monday. The yen, seen as a safe haven, eased 0.3% to 155.18 per dollar.
Gold struck record highs on Monday as worries of a worldwide trade war pushed investors to safety. It traded close to those levels at $2,813 an ounce on Tuesday while Treasury futures ticked a little lower, with markets divided on whether there will be two or just one U.S. rate cut this year.
Gold prices near record high
Gold prices firmed on Tuesday, holding near a record peak hit in the previous session, as lingering U.S. tariff and inflation concerns boosted safe-haven demand, while focus was also on key jobs data due this week, Reuters reported.
Spot gold was up 0.3% to $2,820.69 per ounce by 0252 GMT, after hitting a record high of $2,830.49 in the last session.
(With Reuters inputs)
