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Asian stocks traded in a tight range at the open Thursday as a global relief rally started to lose steam after mixed signals from the Trump administration on its plans for China tariffs.
A regional gauge of stocks swung between small gains and losses as market enthusiasm got curbed after Treasury Secretary Scott Bessent cast doubt on a timely resolution to the US-China trade war. That trimmed the S&P 500’s gain to 1.7% while the Nasdaq 100 rose 2.3%. The yen reversed two days of losses and the dollar weakened in early Asian trade.
Global equities and long-dated Treasuries rose on Wednesday on signs US President Donald Trump is rethinking the most-aggressive elements of his stances on trade and the Federal Reserve. A gauge of global stocks climbed 1.5% Wednesday to close at the highest level in three weeks.
A relief rally swept across global markets Wednesday after the Trump administration defused some of the tension that rattled investors. Still, the wild gyrations in markets since the announcement of the levies on April 2 underscores a new reality for investors that US policies on trade tend to shift without forewarning, making it impossible to make even short term forecasts on where the markets are headed.
“I suspect that you’re going to see more of this in the coming months as we see a ratcheting up and a pulling back up of trade tensions until we get some sort of an idea of what the future actually looks like,” said Brent Schutte at Northwestern Mutual Wealth Management.
Short-dated Treasury yields climbed Wednesday while 10-year and 30-year yields fell after Trump allayed fears he would fire Fed Chair Jerome Powell. The yen slid on Wednesday after Bessent said America won’t be pursuing specific exchange-rate targets in its talks with Japan. The Swiss franc, another haven currency, also fell before edging higher in Asian trading on Thursday.
Trump signaled that the US is going to have a fair deal with China, adding late Wednesday that China may receive a new tariff rate in the next two to three weeks. The Trump administration is also considering reducing tariffs on auto parts ahead of a May 3 deadline, according to the Financial Times.
Bessent added that the administration is looking at multiple factors with regard to China beyond just tariffs. He noted that the strongest relationship between Washington and Beijing is at the top, and that there was no time frame for engagement.
The latest developments improved sentiment but provided little clarity to investors battered by weeks of tariff brinkmanship between the world’s largest economies, heightening fears of global recession and the subsequent hit to corporate profits.
“Given our view that policy is driving the proverbial bus, we haven’t spent too much time in trying to forecast the outlook for earnings or the economy all that much,” said Michael Kantrowitz at Piper Sandler & Co. “As the policy backdrop becomes clearer, and is driving markets less, estimates about the economic and earnings road ahead will become important once again.”
Gold rebounded on Thursday after falling 2.7% in its previous session as investors sold down holdings in favor of risk assets like stocks. Oil prices and Bitcoin were little changed on Thursday.
Despite its advance on Tuesday and Wednesday, the S&P 500 is still down since April 2, when Trump announced his tariff plans. Stocks have swung wildly over that stretch.
Retail investors have been aggressive buyers of US equities this year even as professional money managers ran for cover. Since April 2 alone, the group has pumped over $30 billion into American stocks and ETFs, according to JPMorgan Chase & Co.’s Emma Wu.
