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Nikkei plummets over 5% after rebound
Japan’s Nikkei has now tumbled more than 5% while gold hit another record high as continuing tariff jitters hit Asian stocks in early trade on Friday.
The Nikkei 225 benchmark index was off 5.4%, having jumped 9.1% on Thursday after Donald Trump’s 90-day tariff reprieve. Other markets also reversed many of the previous day’s gains, with South Korea’s Kospi in Seoul off 1.64% and, as just posted, Australia down more than 2%.
Oil and the dollar also slid on fears of a global slowdown in economic activity, while gold hit a new record. The yen – another safe-haven asset – also gained 0.9% against the US dollar on Friday.
Key events
Why did Donald Trump backflip on his latest tariffs for most countries except China, despite his insistence for days that his policies wouldn’t change?
In this podcast, Jonathan Freedland speaks to James Bennet of the Economist about who might have forced the US president’s hand, and what could happen next.
India’s benchmark indexes opened higher on Friday, as a US tariff reprieve lifted sentiment, even as global trade uncertainty continues to linger.
The Nifty 50 rose 1.67% to 22,775.2 while the BSE Sensex gained 1.61% to 75,019.41, respectively, as of 09.23am IST, Reuters reports.
Indian markets were closed on Thursday for a local holiday.
China’s yuan slips to 19-month low against trading partners
The yuan rebounded from 2007 lows against a broadly weaker US dollar on Friday but slipped to a 19-month low against currencies of its major trading partners.
However, the People’s Bank of China (PBOC) will not allow sharp yuan declines and has instructed major state-owned lenders to reduce dollar purchases, Reuters reports, citing people with knowledge of the matter.
A weaker yuan would make Chinese exports cheaper and alleviate tariff impact on the economy. But a sharp decline could also increase unwanted capital outflows and risk financial stability, analysts and economists said.
To reflect the broad dollar weakness in global markets, the PBOC lifted its official yuan midpoint guidance fix for the first time in seven days on Friday.
Prior to the market open, the PBOC set the rate – around which the yuan is allowed to trade in a 2% band – at 7.2087 per dollar. That was 5 pips firmer than the previous fix and 1,017 pips firmer than a Reuters’ estimate of 7.3104.
The PBOC has slightly loosened its grip on the currency this week by allowing official guidance to weaken past the key threshold of 7.2 to the dollar. But it came in much stronger than market projections, in what traders and analysts interpreted as an official attempt to keep the yuan steady as the trade row between the world’s two largest economies showed few signs of abating.
Back to Asian markets: across the region they are again deep in negative territory at the end of a highly volatile week.
Tokyo sank more than 4% – a day after surging more than 9% – while Sydney, Seoul, Singapore, Taipei, Wellington, Jakarta and Manila were also in the red, Agence France-Presse reports.
Ho Chi Minh City stocks rallied, however, after Vietnam said it would hold talks with Donald Trump.
Hong Kong also dropped but Shanghai fluctuated as traders focused on possible Chinese stimulus measures instead of the fact that the country was now facing US duties of up to 145%.
Beijing said on Friday it would implement a moderately loose monetary policy in a bid to reassure investors.
The losses followed a similar story on Wall Street, where the S&P 500 lost 3.5%, the Dow 2.5% and the Nasdaq 4.3%. That ate into the previous day’s gains of 9.5%, 7.9% and 12.2%.
More now on the announcement of Xi Jinping’s first offical foreign trip this year, with the Chinese leader set to visit Vietnam, Malaysia and Cambodia from this Monday to Friday.
Xi’s visit to Vietnam comes on the invitation of President Luong Cuong, Beijing said. He last visited the country in December 2023.
Vietnam has long pursued a “bamboo diplomacy” approach, striving to stay on good terms with both China and the US, Agence France-Presse reports. Hanoi shares US concerns about Beijing’s increasing assertiveness in the contested South China Sea but it also has close economic ties with China.
Xi’s visit to Malaysia will take place from 15-17 April, the country’s government said this week. The communications minister, Fahmi Fadzil, said Xi’s visit was “part of the government’s efforts … to see better trade relations with various countries including China”.
Xi will travel on Thursday to Cambodia, one of China’s staunchest allies in south-east Asia and where Beijing has extended its influence in recent years, before wrapping up the trip on Friday.
Under former leader Hun Sen – prime minister Hun Manet’s father – China poured billions of dollars into infrastructure investments, while Washington’s relationship with Phnom Penh deteriorated.
Cambodia described it as a “milestone visit which will further cement the traditional relations of friendship built by successive leaders of both countries”.
Xi’s visit to the region comes as Beijing squares off with the US in an escalating trade war triggered by President Donald Trump, with many Chinese exports now facing 145% tariffs on arrival in the US.
The Australian and New Zealand dollars were looking to end a wild week with sizeable gains on a crumbling US dollar as the damage done to investor confidence by the chaos over tariffs sparked an exodus from US assets.
The gains for the Aussie were all the more startling as it is usually the market’s whipping boy during times of volatility and stress, Reuters reports. Yet this time it was the US dollar being dumped.
President Donald Trump eased back on tariffs for most countries except China on Wednesday in part to stem a sell-off in Treasuries, yet bond yields were rising again on Friday. Yields on US 30-year bonds were heading for their largest weekly increase since 1982.
Indeed, US 10-year yields started the week 19 basis points below those in Australia, but have now swung to paying 10 basis points more, and still the US dollar fell.
The Aussie was last at $0.6219, having rallied from a five-year trough of $0.5910 early in the week. That left it with a gain of 3.1% for the week, the largest since late 2022.
The kiwi dollar was up at $0.5775, which if held would give it a weekly rise of 3.2%. That was a marked turnaround from a five-year low of $0.5483 hit early in the week, and came despite a cut in local interest rates.
Neither currency fared as well against the major safe havens, however, losing ground to the yen, euro and Swiss franc, in part reflecting the darkening outlook for global growth and resource demand.
Xi to make regional visits next week
Xi Jinping will visit Vietnam, Malaysia and Cambodia beginning on Monday, state-run media is reporting.
The Chinese president’s trip would run from 14-18 April, Xinhua news agency said on Friday.
While American consumers and markets wonder and worry about Donald Trump’s on-again, off-again tariffs, there’s one group cheering him as they hope he’ll prop up their sinking business: Gulf coast shrimpers.
The Associated Press reports that American shrimpers have been hammered in recent years by cheap imports flooding the US market and restaurants, driving down prices to the point that profits are razor thin or shrimpers are losing money and struggling to stay afloat.
Tariffs, they hope, could level the playing field and help their businesses not just survive but thrive.
“It’s been tough the last several years that we’ve tried to fight through this,” said Reed Bowers, owner of Bowers Shrimp Farm in Palacios, Texas. Tough times meant difficult choices for many.
Cutting people off, laying people off, or reduce hours or reduce wages … whatever we can do to survive.
Since 2021, the price of imported shrimp has dropped by more than $1.5bn, according to the Southern Shrimpers Alliance trade association, causing the US shrimp industry to lose nearly 50% of its market value. More than 90% of the shrimp consumed in the US is imported, it says.
Dollar sinks amid US asset sell-off
The US dollar slumped on Friday as waning confidence in the US economy prompted investors to ditch US assets to the benefit of safe havens like the Swiss franc, yen and euro, as well as gold.
The yellow metal recorded a new all-time peak in early Asia trade, and the franc notched a fresh decade high, Reuters reports.
Investors dumped Wall Street stocks overnight, as the powerful rally on Wednesday – when Donald Trump abruptly paused higher tariff rates on dozens of trading partners – reversed course in a 24-hour frenetic period for markets.
Longer-dated US Treasuries are also selling off, putting 10-year yields on course for their biggest weekly jump since 2001.
The Chinese yuan had tumbled to an all-time low in offshore trading on Tuesday, but erased all those losses a day later, surging again on Thursday, and was strengthening in early trading.
Chris Weston, head of research at Pepperstone, said:
There has been a pronounced ‘sell US’ vibe flowing through broad markets and into the classic safe-haven assets, with the USD losing the safe-haven bid.
Trump’s 90-day tariff respite – which came despite his insistence for days that his policies would never change – didn’t include China. Instead, he ratcheted up duties on Chinese imports to an effective rate of 145%, further escalating the high-stakes confrontation between the world’s two largest economies.
Nikkei plummets over 5% after rebound
Japan’s Nikkei has now tumbled more than 5% while gold hit another record high as continuing tariff jitters hit Asian stocks in early trade on Friday.
The Nikkei 225 benchmark index was off 5.4%, having jumped 9.1% on Thursday after Donald Trump’s 90-day tariff reprieve. Other markets also reversed many of the previous day’s gains, with South Korea’s Kospi in Seoul off 1.64% and, as just posted, Australia down more than 2%.
Oil and the dollar also slid on fears of a global slowdown in economic activity, while gold hit a new record. The yen – another safe-haven asset – also gained 0.9% against the US dollar on Friday.
Australian stock losses top 2% after Thursday rally
In Australia today’s share market decline has continued, with stocks now tanking more than 2% as investors who drove a relief rally in the previous session worried about the US tariffs fallout.
The S&P/ASX 200 index dropped as much as 2.4% to 7,524.50 points by 0016 GMT, after the benchmark surged 4.5% on Thursday following Donald Trump’s tariff reprieve.
The benchmark was looking to lose nearly 2% for the week, if losses hold, Reuters reports.
Trump temporarily paused many of his new tariffs but further ramped up pressure on China, a major trading partner for Australia, with levies for a total of 145%. Investors worry that China may again respond in kind with higher tariffs.
Any potential slowdown in the world’s second largest economy from tariffs would be detrimental to local resources-focused stocks, which have high exposure to China, a major consumer of commodities.
Australian mining stocks declined 1.8%. Heavyweights BHP and Rio Tinto retreated 2.8% and 2.3% respectively. Fortescue’s shares fell 2.7%. Energy stocks retreated 3.5% after oil prices declined more than 3% overnight. The subindex was on track to decline more than 5% for the week.
Top energy companies Woodside Energy and Santos fell 3.5% and 3.6% respectively.
Gold stocks rose 2.2% to hit a fresh all-time high, mirroring the record high in gold prices.
Banking stocks declined 2.9%. Financials were on track to lose 2.7% for the week. The “big four” banks fell between 2.8% and 3.2%.
New Zealand’s benchmark S&P/NZX 50 index fell 1.5% to 12,023.84 points. New Zealand stocks were heading for a 1.6% fall for the week, in what could be their worst week since early March.
US dollar falls
The US dollar index has dropped below 100 for the first time since July 2023, Reuters is reporting.
And the currency is down 0.8 against the Swiss franc, hitting a 10-year low of 0.8142
Nikkei plunges as gold soars
Japan’s benchmark Nikkei index has fallen 3.6% amid continuing tariff worries.
Spot gold, however, has risen to a record high of $3,205.21 an ounce, Reuters reports, as investors seek safe havens.
And the euro has extended its gains, up as much as 1.7% at $1.13855.
Donald Trump has threatened Mexico with sanctions and tariffs in a dispute over water sharing between the two countries, accusing Mexico of breaking an 81-year-old treaty and “stealing the water from Texas farmers”.
Under the 1944 treaty, Mexico must send 1.75 million acre-feet of water to the US from the Rio Grande through a network of interconnected dams and reservoirs every five years, Reuters reports. An acre-foot of water is enough to fill about half an Olympic-sized swimming pool.
The current five-year cycle is up in October, but Mexico has sent less than 30% of the required water, according to data from the International Boundary and Water Commission.
Trump posted on his Truth Social platform on Thursday:
Mexico OWES Texas 1.3 million acre-feet of water under the 1944 Water Treaty, but Mexico is unfortunately violating their Treaty obligation.
My Agriculture Secretary, Brooke Rollins, is standing up for Texas Farmers, and we will keep escalating consequences, including TARIFFS and, maybe even SANCTIONS, until Mexico honors the Treaty, and GIVES TEXAS THE WATER THEY ARE OWED!
The office of Mexican president Claudia Sheinbaum did not immediately respond to a request for comment.
Phillip Inman
In the UK, shoppers stayed away from the high street in March, a situation retailers said could worsen if the economic gloom caused by Donald Trump’s tariff war hits consumer confidence.
Footfall fell 5% in March to extend a downturn in February that retailers said could be attributed to a recent rise in inflation and pressure on pay packets since a brief revival during the January sales.
Out-of-town shopping centres were the worst hit, falling by 5.8%, though traditional high streets and retail parks also suffered a loss of sales after drops in footfall of 4% and 1.2% respectively.
The British Retail Consortium said that while the impact of US tariffs on imported goods was difficult to calculate, it could have a chilling effect on people’s willingness to spend, especially on expensive items.
Helen Dickinson, the organisation’s chief executive, said:
Global uncertainties resulting from tariffs and a potential economic slowdown could reduce the appetite for shopping trips in the coming months.
See the full story here:
Australia’s S&P/ASX 200 has fallen on opening a short while ago, as expected, dropping 0.5% to 7,670.50 points in early trade after Wall Street’s sell-off overnight.
ASX to open sharply lower amid worsening trade war
Jonathan Barrett
Australian shares are poised to open sharply lower this morning, as concerns about Donald Trump’s unsettling policy shifts and deteriorating trade relations between the world’s two biggest economies take hold.
Futures prices are pointing to a 1.6% fall in the benchmark S&P/ASX 200 to 7,590 points when it opens later this morning, after a sell-off on Wall Street overnight.
Investors have had to contend with wild swings this week triggered by changes to the US tariff regime, with share prices pushed around by extreme bouts of relief and fear.
While some nations have enjoyed a reprieve from their super-sized tariffs, Australia’s position, along with those of the UK and New Zealand, are unchanged given they remain subject to the US “baseline” 10% charge.
The White House clarified overnight that total tariffs on China had been raised by 145% since Trump took office.
The Reserve Bank of Australia governor, Michele Bullock, said last night that an uncertain and rocky path lay ahead, saying “financial market and economic volatility can be expected as this process unfolds”.
The Australian dollar has recovered significant ground in recent days, rising to US62.2c this morning, after threatening to plunge below the 59c barrier earlier this week.
Opening summary
Hello and welcome to our live business coverage as the shockwaves from Donald Trump’s tariffs moves continue to buffet global markets.
The US president has blamed “a transition cost, transition problems” as US markets continued to sink in the wake of his seesawing global tariffs strategy and escalating trade war with China.
“We think we’re in very good shape,” Trump said on Thursday. “We think we’re doing very well. Again there will be a transition cost, transition problems, but in the end it’s going to be a beautiful thing.”
His remarks came as US stocks tumbled again after a historic rally following Trump’s surprise retreat on Wednesday on the hefty tariffs he had just imposed on dozens of countries. He has instead focused on China, where goods now attract tariffs totalling 145% effective immediately – 125% in “reciprocal” tariffs plus 20% already imposed for China’s alleged role in the fentanyl crisis.
Former US treasury secretary Janet Yellen said Trump’s tariffs were “the worst self-inflicted wound that I have ever seen an administration impose on a well-functioning economy”. She accused the US president of having “taken a wrecking ball” to the American economy.
China said Trump’s trade war with Beijing “will end in failure” for Washington. Beijing’s retaliatory 84% tariffs on US imports came into effect on Thursday. Its foreign ministry said it was not interested in a fight “but will not fear if the United States continues its tariff threats”.
In other developments:
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The Dow was down 2.5% by Thursday’s end after soaring on Wednesday afternoon. The Nasdaq Composite was down more than 4%, after posting its biggest gain in more than two decades on Wednesday, and the S&P 500 down 3.4%.
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Stocks seemed unresponsive to news on Thursday morning that the European Union announced it would suspend 25% retaliatory tariffs against US imports and new data showed inflation in the US cooled to 2.4% in March – both typically cause for optimism on Wall Street – reflecting the market’s apparent state of fatigue after a rollercoaster week, report Anna Betts and Lauren Aratani.
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The US president said he would “love” to make a deal with China, and that he believed he and Chinese president Xi Jinping would “end up working out something that’s very good for both countries”.
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China has said it will immediately restrict imports of Hollywood films in retaliation for the US president’s escalation of US tariffs on Chinese imports, targeting one of the most high-profile American exports. Beijing’s National Film Administration said Trump’s tariffs would further sour domestic demand for US cinema in China and it would “moderately reduce the number of American films imported”. The move comes after three decades during which China imported 10 Hollywood movies a year. Industry analysts said the financial impact was likely to be minimal, however, because Hollywood’s box office returns in China have declined significantly in recent years, Reuters reported.
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Trump is facing accusations of market manipulation over a Truth Social post on Wednesday where he said it was a “great time to buy” just hours before he made a dramatic U-turn on his trade war that led to big rises in stock markets around the world.
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The European Union and the United Arab Emirates have agreed to launch free trade talks. The EU is the UAE’s second-largest trading partner, accounting for 8.3% of the Emirati total non-oil trade.
