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Stocks tread carefully as Trump's tariff plans approach

Asian stocks sank on Wednesday as investors worried about escalating global trade tensions and awaited the details of U.S. president Donald Trump's proposed tariffs.

In recent weeks, investors have been focused on a new round of reciprocal taxes that Trump is expected to announce at 2000 GMT on Wednesday.

Trump has already imposed duties on autos, aluminium and steel, as well as increased duties on all Chinese goods. This has rattled the markets, with fears growing that a full-blown global trade war may trigger a sharp economic slowdown.

European futures showed a subdued opening, with STOXX Futures down 0.27% while Germany's DAX Futures were 0.24% lower.

After a turbulent session in the United States, Asian stocks were unable to find direction. Japan's Nikkei index was up by 0.25% at the end of the session after it had hit its lowest level since early September. South Korea's benchmark stock index fell 0.6%.

Wall Street's benchmark S&P and Nasdaq both ended the session higher, after earlier losing ground. The Dow ended a little lower.

Ben Bennett, Asia-Pacific Investment Strategist at Legal & General Investment Management said: "Nervousness has become the dominant emotion right now."

Investors hope for clarity and the beginning of a deal-making phase. Tariffs are already impacting business sentiment and will likely lead to a drop in global economic activity over the next few months.

Hong Kong's Hang Seng index was barely changed, but China's blue chip index rose 0.14%.

Vasu Menon is the managing director for investment strategy at OCBC. He said: "Trump called April 2, 'Liberation Day,' but it's unlikely that investors will be truly liberated from tariff uncertainty."

This possibility will likely continue to make investors nervous.

SOFT DATA

Investors are becoming increasingly concerned by signs such as rising prices, a slowing economy and cracks on the labour market.

The data showed that U.S. manufacturing shrank in March, after two months of growth. A measure of inflation in the factory gates jumped to its highest level in almost three years due to rising concern over tariffs on imported products.

The Labour Department reported on Tuesday that U.S. employment opportunities fell by 194,000 in February to 7.568 millions as tariff uncertainty dampened labour demand.

The yield on the benchmark 10-year Treasury bill in the United States was 4.197% during Asian hours, having fallen to 4.133% Tuesday. This is its lowest level since February 4.

Currency markets were quiet, with most pairs trading within tight ranges. The euro remained at $1.0792 while the sterling traded at $1.29175. The yen was slightly weaker, at 149.92 dollars per yen.

George Boubouras is the head of research for K2 Asset Management. He says that investors should look past the noise to gauge the landscape of the second half 2025 "when the US will launch their next phase policies, which will include tax cuts and deregulation."

But the focus will be on tariff details. This is especially true after a report in the media said that Trump's advisers were considering a plan to raise duties by around 20% on products from almost every country rather than target certain countries or specific products.

"We are now in the midst of Trump's time to shine, with many already having deleveraged their positions to be as neutral or flat as possible on equity, USD (dollar), and Treasuries." Chris Weston is the head of research for Pepperstone.

Gold, which is seen as a safe haven against economic and political turmoil, was well-priced at $3,116.96 an ounce. This price, while up by 0.2%, was still just below the record set in the previous session.

Gold is up 19% this year. This follows a gain of 27% in 2024, which was the best performance it had in over a decade.

As traders waited for tariff news, oil prices remained steady. Brent futures were barely changed at $74.45 per barrel while U.S. West Texas Intermediate Crude futures were $71.21 a barrel.

(source: Reuters)