(Bloomberg) — Asian stocks traded in a tight range and the yen weakened after US-Japan trade talks advanced, as investors adopt a wait-and-see approach to see how other tariff negotiations unfold.
Japanese shares gained slightly after President Donald Trump said negotiators made “big progress” in talks to strike a deal to avoid higher levies. The yen weakened after the country’s chief trade negotiator said currencies weren’t discussed. Gold advanced to a record while Treasury yields and a gauge of the dollar inched up.
The progress in discussions with Japan, “while preliminary, offer a small positive signal for markets,” said Rajeev De Mello, a global macro portfolio manager at Gama Asset Management. “The trajectory of US-Japan trade talks will continue to be closely monitored, not just for their bilateral implications, but also as a potential framework for how the US may approach trade relationships with other allies.”
Moves in Asia came after a nascent calm across global markets was shattered by Federal Reserve Chair Jerome Powell, who signaled a wait-and-see approach to tariffs and and pushed back on hopes he would act quickly to soothe investor fears. A two-day consolidation in stocks ended Wednesday after the US ratcheted up trade tensions by putting restrictions on some chip exports by Nvidia Corp. while China indicated it’s open for talks with the US.
Asked at the Economic Club of Chicago if he envisioned a “Fed put” in which the central bank intervened to calm markets, Powell said “no,” adding that too many questions exist about the impact of Trump’s policies. “We don’t know that yet, and until we know that we can’t make informed decisions.” For now, the US labor market is “in a really good place,” with supply and demand falling in tandem, Powell said.
The US and Japan kicked off tariff negotiations with an aim to reach a deal as soon as possible but did not discuss currency issues, Japan’s top negotiator Ryosei Akazawa said.
Akazawa met with Trump before holding trade talks with US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer to seek a reprieve from the administration’s levies. The talks didn’t result in an immediate halt on the tariffs, but preparations are underway for the second round of talks to take place later this month, Akazawa said.
Meanwhile, China wants to see a number of steps from Trump’s administration before it will agree to trade talks, including showing more respect by reining in disparaging remarks by members of his cabinet, according to a person familiar with the Chinese government’s thinking.
“While we expect that trade talks will ultimately yield progress, the brinkmanship between the US and China looks set to continue in the near term,” said Solita Marcelli at UBS Global Wealth Management.
Cleveland Fed President Beth Hammack took a similar stance on Wednesday as Powell, suggesting the Fed should hold interest rates steady until there’s more clarity on the impact of levies. Swaps traders cemented bets on policy-easing, wagering the Fed would lower interest rates a full percentage point by next January.
“This has been a year of dashed hopes, first with disappointing tariffs, and now with the Fed leaving investors out in the cold,” said Michael Bailey, director of research at FBB Capital Partners. “Powell’s market snub came at a bad time with semis wreaking havoc on investor sentiment around the world.”
Meanwhile, the European Central Bank is set to hand down an interest rate decision.
In commodities, West Texas Intermediate, the US benchmark, climbed early Thursday in Asia, extending its 1.9% rise Wednesday.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 10:11 a.m. Tokyo time
- Hang Seng futures fell 1%
- Japan’s Topix rose 0.3%
- Australia’s S&P/ASX 200 rose 0.3%
- Euro Stoxx 50 futures fell 1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.3% to $1.1363
- The Japanese yen fell 0.5% to 142.61 per dollar
- The offshore yuan fell 0.1% to 7.3089 per dollar
Cryptocurrencies
- Bitcoin was little changed at $84,255.76
- Ether rose 0.9% to $1,587.83
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.30%
- Australia’s 10-year yield declined seven basis points to 4.27%
Commodities
- West Texas Intermediate crude rose 0.6% to $62.82 a barrel
- Spot gold rose 0.2% to $3,348.36 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson and Aya Wagatsuma.
©2025 Bloomberg L.P.
