Asian Stocks Lose Momentum, Dollar Slips As Trade Optimism Fades
TEHRAN (Tasnim) – Asian markets faltered and the dollar weakened on Tuesday as renewed doubts over US President Donald Trump’s trade strategy cast a shadow over global risk sentiment.
A rally in Asian equities stalled and the dollar gave up gains as concerns re-emerged over the long-term impact of US trade policy on global growth.
European stock futures signaled a softer open, while Chinese shares remained flat, failing to build on Wall Street’s sharp gains after the 90-day pause in US-China tariff escalation.
US futures for the S&P 500 and Nasdaq were also slightly lower in Asian afternoon trade, reflecting lingering caution among investors.
“A de-escalation was inevitable and I think it's clear there won't be much durable that comes out of these talks,” said Christopher Hodge, chief US economist at Natixis.
“When all is said and done, tariffs will still be dramatically higher and will weigh on US growth.”
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2%, pulling back from a six-month high earlier in the session.
Fitch Ratings estimated the effective US tariff rate has dropped to 13.1% from 22.8% following the trade pause, though it remains well above the 2.3% level seen at the end of 2024 and the highest since 1941.
Persistent concerns about US growth and stalled trade negotiations have unsettled markets since Trump launched his tariff measures in April.
Investors have since reduced exposure to US assets, favoring safe havens such as the Japanese yen, Swiss franc, and gold.
The dollar, which initially strengthened on Monday following news of the tariff truce, weakened on Tuesday in Asia as the rally lost momentum.
Under the current terms, Washington will lower tariffs on Chinese imports to 30% from 145%, while Beijing will reduce duties on US goods to 10% from 125%.
While the move offered some temporary relief, fears persist over broader economic fallout.
“Fundamentally, uncertainty still lingers, especially around the potential pullback in consumer and corporate spending,” said Charu Chanana, chief investment strategist at Saxo in Singapore.
“That said, institutional investors were largely on the sidelines during this rally, holding broadly neutral on US equities. This creates the potential for aggressive dip buying on any retracement.”
Attention now turns to US inflation data due later on Tuesday, which could influence Federal Reserve policy expectations.
“Should we be treated to another set of soft CPI figures, it could allow traders to refocus on Fed policy and the potential for cuts, and take some steam out of the dollar's rebound,” said Matt Simpson, senior market analyst at City Index.
Market sentiment has shifted, with traders dialing back expectations for Fed rate cuts.
Current pricing reflects 56 basis points of easing this year, compared to over 100 basis points anticipated in mid-April at the height of tariff tensions.
US Treasury yields climbed to one-month highs on Monday and remained near those levels Tuesday morning.
The two-year yield stood at 3.9873%, and the benchmark 10-year yield was last at 4.4512%.
Bitcoin held steady at $102,676, remaining above the $100,000 threshold breached last week.
Oil prices edged lower after a two-week high in the previous session, while gold recovered slightly after Monday’s 2% decline.
