TSX runs higher on rate cut expectations
Investing.com-- Most Asian stock markets were subdued on Friday, while Hong Kong and South Korea saw steep losses as U.S. President Donald Trump said he would start sending letters to trading partners to set new tariff rates by later today.
Major U.S. stock indexes rallied in a holiday-shortened session on Thursday, lifted by a stronger-than-expected jobs report that underscored the economy’s resilience.
However, the data prompted markets to scale back expectations for a Federal Reserve rate cut this month. Prospects of higher-for-longer rates also contributed to the weakness in Asian markets.
Wall Street futures ticked lower in Asian trading hours. U.S. markets will be closed on Friday for the Independence Day holiday.
Trump to start sending trade tariff letters by Friday
President Trump said on Thursday that Washington will begin issuing formal letters to major economies outlining new U.S. export tariff rates as early as Friday.
He said the U.S. will forgo lengthy negotiations with over 170 countries and instead unilaterally impose flat tariff rates ranging between 20% and 30%.
The letters will reportedly be sent to 10 countries at a time.
So far, the U.S. has signed trade deals only with the UK and Vietnam, and a limited framework with China, falling far short of Trump’s previous pledge to secure 90 deals in 90 days.
Markets interpreted this as a return to a more aggressive, protectionist stance that could disrupt global supply chains and weigh on export-driven economies, many of which are in Asia.
Investors are bracing for possible retaliatory measures and broader trade frictions that could dampen corporate earnings and slow regional growth.
S.Korea, Hong Kong lead losses
South Korea’s KOSPI led losses with a 1.6% slump, while Hong Kong’s Hang Seng index dropped 1.2%.
Both markets saw broad-based losses on Friday, with chip stocks and auto shares leading losses.
Elsewhere, investors stayed on the sidelines ahead of the U.S. tariff decision, leading to marginal moves.
China’s Shanghai Composite index and the Shanghai Shenzhen CSI 300 both gained 0.2%.
Japan’s Nikkei 225 was largely unchanged, while the broader TOPIX index fell 0.2%.
Australia’s S&P/ASX 200 index inched 0.2% higher, while Singapore’s Straits Times Index lost 0.3%.
Futures tied to India’s Nifty 50 fell 0.2% on Friday.