1 week Ago By Reuters
Asian emerging market equities rallied the most in more than two years on Thursday as traders snapped up beaten-down stocks after US President Donald Trump said he would pause the implementation of hefty tariffs hours after they came into force.An MSCI gauge of EM Asian stocks leapt 4 per cent in their biggest one-day gain since mid-November 2022. A subset of equities in ASEAN countries surged about 5 per cent to mark their best day since the start of the COVID-19 pandemic.
Most regional currencies also appreciated against the US dollar: Malaysia's ringgit and Indonesia's rupiah rose 0.5 per cent. The latter hit an all-time low on Wednesday.
Trump's about-face came after his punitive tariffs on most trading partners triggered carnage in global financial markets that sent equities spiralling towards bear territory at a breakneck pace, sparked a sell-off in US Treasuries and erased trillions in value.Singapore's FTSE Straits Times index surged as much as 9 per cent after plunging 15 per cent from a record high in less than two weeks. Benchmarks in Indonesia, Malaysia and Thailand also jumped about 5 per cent in morning trade.
"The 90-day pause in reciprocal tariffs seems to reduce the likelihood that Emerging Asia is headed for its worst GDP (gross domestic product) outcomes in this highly fluid moment in global economic history," analysts at Barclays wrote."But it does not, in our view, mean that the region is out of the woods yet." Trump's temporary relief excluded China, Southeast Asia's largest trading partner and source of investment.
Rather, he hiked import levies on Asia's biggest economy to 125 per cent after Beijing responded to Trump's initial tariffs with a duty of 84 per cent on US goods.The tit-for-tat moves by the world's two biggest economies have kept traders on the edge of their seats. "A dial-back in trade antagonism is an aligned interest but unfortunately not imminently assured," said Vishnu Varathan, head of macro research for Asia excluding Japan at Mizuho Bank.
"Instead, the more likely outcome is an extended standoff (in coming weeks), with significant risks of further escalation."Equities in China rose while those in Hong Kong advanced more than 3 per cent, though China's yuan fell to its weakest since the global financial crisis against the backdrop of the intensifying trade war with the US Meanwhile, Philippine stocks jumped more than 2 per cent, while its currency, the peso , was largely unchanged ahead of a central bank monetary policy meeting.Financial markets in India were closed for a holiday.
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