(Bloomberg) — Japanese stocks led gains in Asia while US stock futures edged down as investors continued to evaluate mixed messages on tariffs from the Trump administration.
Shares in Japan rose more than 1% with companies such as Toyota Motor Corp. jumping after President Donald Trump said he is exploring a pause in auto tariffs. Futures contracts for the S&P 500 pared earlier losses from a plan to impose tariffs on semiconductor and pharmaceutical imports. Treasuries were steady and a gauge of the dollar edged higher, trimming some of Monday’s decline.
Investors are still struggling to game out the economic spillovers of the trade war given the back-and-forth in negotiations. While US officials insist the tariff strategy is carefully constructed, critics see the trading order as subject to the whims of a transactional president. The White House on Monday announced trade probes into semiconductors and pharmaceuticals, seen as a precursor to imposing tariffs that threaten to broaden Trump’s sweeping US trade war.
“There is probably still a lot of damage being done to the real economy and there remains a confidence crisis in the markets, meaning further downside and volatility in risk assets is probable,” wrote Kyle Rodda, a senior market analyst at Capital.com. “The risk of a recession in the US remains higher, if not because of the tariffs, then the ongoing policy uncertainty alone.”
Meantime, Treasury Secretary Scott Bessent played down the recent selloff in the bond market, rejecting speculation that foreign nations were dumping their holdings of US Treasuries, while flagging that his department has tools to address dislocation if needed.
“I don’t think there’s a dumping” by foreign investors, Bessent said in an interview Monday with Bloomberg Television. He pointed to what he said was increased foreign demand at auctions for 10-year and 30-year Treasury securities last week.
Bessent rejected concerns about the simultaneous decline in Treasuries and the dollar last week signifying that the US was losing its haven status.
“We are still a global reserve currency” and there is still a “strong dollar policy,” Bessent said.
The biggest Wall Street firms have highlighted how difficult it has been to predict the trajectory for equities. Barclays Plc’s Venu Krishna said the recent volatility leaves little confidence in any pricing now, while JPMorgan Chase & Co.’s Dubravko Lakos-Bujas indicated that forecasting in the current environment is a challenge and leaves a wide range of outcomes.
Strategists at BlackRock Inc.’s research arm said they are dialing up their risk-taking and embracing US and Japanese stocks following the pause of tariffs on many global trading partners, even as they steer clear of longer-dated US debt.
“The near-term risk of a financial accident has eased,” wrote the BlackRock Investment Institute strategists including Jean Boivin and Wei Li. “Checks on policy allowed us to extend our tactical horizon back to six to 12 months and resume our positive view on US and Japanese stocks.”
Eyes will also be on Chinese President Xi Jinping’s first overseas trip of the year, after he landed in Vietnam on Monday, with visits to Malaysia and Cambodia also scheduled. He’s expected to present his nation as a more stable partner than the US under Trump.
Meanwhile, Federal Reserve Governor Christopher Waller laid out two scenarios for how Trump’s trade policy could affect the US economy, but said the inflationary impact of either would likely be temporary.
Waller called the new tariff policy “one of the biggest shocks to affect the US economy in many decades,” in remarks prepared for an event in St. Louis on Monday. Should there be a small tariff effect on inflation, rate cuts would “very much” be on the table for the latter half of 2025, he said.
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.1% as of 9:36 a.m. Tokyo time
- Hang Seng futures rose 0.8%
- Japan’s Topix rose 1.3%
- Australia’s S&P/ASX 200 rose 0.2%
- Euro Stoxx 50 futures fell 0.4%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.3% to $1.1321
- The Japanese yen fell 0.3% to 143.47 per dollar
- The offshore yuan was little changed at 7.3181 per dollar
Cryptocurrencies
- Bitcoin fell 0.2% to $84,667.29
- Ether fell 0.4% to $1,627.97
Bonds
- The yield on 10-year Treasuries was little changed at 4.38%
- Australia’s 10-year yield declined four basis points to 4.36%
Commodities
- West Texas Intermediate crude rose 0.5% to $61.82 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott.
©2025 Bloomberg L.P.
