(Bloomberg) — Stocks and bonds fluctuated Tuesday as Asian investors looked to tariff negotiations between the US and its partners for clues before taking long-term bets in a volatile market.
US assets were mixed with equity-index futures extending a late Monday rally after the S&P 500 slumped more than 2%. A gauge of the dollar extended its losses after weakening to a 15-month low while Treasuries stabilized. The yen appreciated to trade near the closely-watched 140-a-dollar level. Asian stocks were little changed while oil rose and gold advanced to a record.
Traders are having to wade through a slew of headlines on country-specific negotiations after President Donald Trump ratcheted up his global trade war earlier this month by imposing the highest levies by the US in a century. Concerns Trump may be preparing to fire Federal Reserve Chair Jerome Powell is fueling more unease for traders, who await earnings from Tesla Inc. and Alphabet Inc. this week for cues on how companies are navigating this new environment.
“We are moving to a fundamentally different epoch in financial markets,” said Ben Powell, Chief Middle East and APAC Investment Strategist at BlackRock Investment Institute. “We’ve had significant changes in the structural side of the global economy that’s actually been taking place several years and we see President Trump as something of an accelerant for these pre-existing trends.”
Japan won’t just keep conceding to US demands to reach a deal over tariffs, Prime Minister Shigeru Ishiba said Monday, in some of his most combative remarks since Trump launched a push for more access to Tokyo’s sensitive auto and agricultural sectors as part of his global trade war. Finance minister Katsunobu Kato said Japan is in touch with other nations on how best to convey widely-shared concerns about the impact of tariffs during meetings in Washington this week.
Beijing also warned nations against making trade agreements with Washington that hurt China, highlighting how economies around the world risk getting caught up in tensions between the two powerhouses.
US Vice President JD Vance is in New Delhi as the US threatens to increase the 10% tariffs on Indian exports to 26% if no deal is reached by the end of the 90-day pause Trump put in place earlier this month.
“Optimism appears to be fading, with markets potentially beginning to price for a less favorable outcome” in tariff talks, wrote Jun Rong Yeap, market strategist at IG Asia. “Tough rhetorics from key US trading partners, such as Japan, has underscored the challenges in reaching a consensus, suggesting that talks are likely to drag on for longer.”
Thailand, which is seeking a reprieve from Trump administration’s plan to levy a 36% tariff on its goods, said ministerial level talks previously scheduled for this week have been delayed.
The impact of Trump’s tariff campaign has already filtered through to Japanese companies, with about 10% saying the measures have affected their businesses and more voicing concern on the future jolt, according to a survey.
Concerns Trump may be preparing to fire Powell for refusing to cut interest rates faster is the latest concern for markets, already reeling after the president ratcheted up tariffs to the highest level in a century. The mood on Wall Street has turned from optimism to a ‘Sell America’ mode as Trump upends a global trade order with levies, a move that economists have said will boost inflation and push the US into a recession.
“A multi-front trade war is by itself a lot for stocks to handle, so adding a Fed independence crisis on top of it has markets understandably jittery,” wrote Jeff Buchbinder, chief equity strategist for LPL Financial.
The president took to Truth Social Monday, amping up the pressure on the Fed chair insisting there was “virtually” no inflation and it was time for “preemptive cuts.” The last reading of the Fed’s preferred inflation gauge remains above the central bank’s target, and there will be a new readout next week.
Explainer: Can Trump Fire Powell? How the President Can and Can’t Sway Fed
National Economic Council Director Kevin Hassett said on Friday that Trump is studying whether he’s able to fire Powell. The comments raised new questions about whether the Fed can maintain its longstanding independence.
Trump’s tirades have forced a reappraisal of the assets fundamental to US economic dominance. The dollar and Treasury bonds, traditional havens at times of stress, suddenly look much less appealing.
“The US is still the US. That’s not going to change,” BlackRock’s Powell said. “The dollar’s still the dollar. So to a degree there is no alternative.”
The greenback resumed its decline against Group-of-10 peers Tuesday. Meanwhile, China let the yuan weaken against almost all major currencies to support its teetering economy as the trade war with the US deepens.
Amid the uncertainty, investors are piling into gold, with the precious metal topping $3,444 an ounce following a 2.9% surge on Monday.
“It’s an uncertainty and market is very sensitive at the moment to uncertainty,” said Ecaterina Bigos, CIO for Asia ex-Japan core investments at AXA Investment Managers.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.5% as of 12:38 p.m. Tokyo time
- Japan’s Topix fell 0.2%
- Australia’s S&P/ASX 200 was little changed
- Hong Kong’s Hang Seng fell 0.1%
- The Shanghai Composite rose 0.3%
- Euro Stoxx 50 futures fell 0.5%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.2% to $1.1538
- The Japanese yen rose 0.5% to 140.12 per dollar
- The offshore yuan fell 0.2% to 7.3115 per dollar
Cryptocurrencies
- Bitcoin rose 0.9% to $88,181.98
- Ether was little changed at $1,576.63
Bonds
- The yield on 10-year Treasuries was little changed at 4.41%
- Australia’s 10-year yield declined two basis points to 4.27%
Commodities
- West Texas Intermediate crude rose 1% to $63.73 a barrel
- Spot gold rose 1.8% to $3,486.29 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Abhishek Vishnoi, Chiranjivi Chakraborty and Aya Wagatsuma.
©2025 Bloomberg L.P.
