(Bloomberg) — Asian shares had a modest start to the week as investors await progress in US trade negotiations with the region and signs of further stimulus from China before taking risky bets.
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A regional gauge advanced 0.4% while futures for the S&P 500 declined 0.5%, indicating a four-day US equities rally may be poised to snap. Gold dropped as much as 1.6% as traders unwound positions on signs the metal’s advance may have run too far and too fast. Treasuries and the dollar were steady while cryptocurrencies retreated.
Amid Asia’s busiest earnings week this season, investors will also focus on key economic data- the Bank of Japan’s rate decision, and US jobs report and gross domestic product data – to see if the recent steadiness in markets will continue as tariff tensions tamp down. Traders are also taking some comfort from hopes that the Federal Reserve may reduce interest rates earlier than expected.
The “market is getting more sanguine in recent weeks but I’m more inclined to stay defensive, and stay more oriented to domestic plays across markets,” said Xin-Yao Ng, a fund manager at Aberdeen Investments in Singapore. “The environment will remain highly uncertain and volatile throughout the year, with constant tension around tariffs and geopolitics.”
Investors will also be on watch for any signs of progress in US trade negotiations after President Donald Trump suggested another delay to his higher tariffs was unlikely. Asian economies geared for exports and facing some of the highest US “reciprocal” tariffs are leading the way over their western counterparts in trade negotiations with the administration.
To help manage the next steps, the Trump team has drafted a framework to handle negotiations with about 18 countries, including a template that lays out common areas of concern to guide the discussions.
US Treasury Secretary Scott Bessent said the Trump administration is working on bilateral trade deals with 17 key trading partners, not including China. Bessent reiterated the administration’s argument that Beijing will be forced to the negotiating table because China can’t sustain Trump’s latest tariff level of 145% on Chinese goods.
“Ultimately, we have to think about what is the steady state tariffs from the US to the rest of the world,” said Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International on Bloomberg TV. “How does the rest of the world, especially China and Europe, cope with that. So there’s a lot of uncertainty and that makes obviously planning very, very difficult for businesses.”
