Stocks, Treasuries Slip in Countdown to Tariffs: Markets Wrap

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April 2, 2025 – 05:18

(Bloomberg) — Asian stocks edged down as traders grappled with how to position themselves in the countdown to President Donald Trump’s sweeping tariffs announcement.

A regional gauge declined as indexes in Japan and South Korea dropped, while Hong Kong fluctuated. Treasury yields advanced after a multi-day drop as traders weighed the odds of Federal Reserve policy easing. US and European equity-index futures fell, indicating stocks may remain under pressure. The dollar was little changed against its major peers.

Trump’s deliberations over his plans to impose reciprocal tariffs are coming down to the wire, with his team said to be still finalizing the size and scope of the new levies he is slated to unveil. That unpredictability has shaken markets, prompted economists to cut their growth forecasts and forced central bankers to factor in the potential inflationary impact of import costs.

The tariffs will take immediate effect after they are announced in the event that’s due to start from 4 p.m. New York time on Wednesday.

“We find our trading environment in a state of chop, with the whippy intraday price action across markets being thematic of market players massaging exposures around the edges and not wanting to commit,” wrote Chris Weston, head of research at Pepperstone Group in Melbourne. “We head into Trump’s moment to shine with many having already de-leveraged to run as flat or neutral a position as they can.”

Trump is set to impose so-called reciprocal tariffs and other levies on what he has labeled “Liberation Day” — a move expected to cover a broader swath of trade than the 1930 Smoot-Hawley duties that have long served as a cautionary tale about protectionism. It’s part of Trump’s wider project to dismantle the global trading system the US helped build out of that era’s wreckage, on his belief that Americans got a raw deal.

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Tariffs and retaliation will take place until the middle of the year and eventually “some deals are going to be struck,” Hartmut Issel, head of APAC equities and credit at UBS Wealth Management, said in a Bloomberg TV interview. “So negotiations, discussions and then finally some solutions are also on the table, we think for the second half.”

Three of Wall Street’s most-reliable bulls have said that they were too optimistic in their estimates for the S&P 500 this year, with strategists at Goldman Sachs Group Inc., Societe Generale and Yardeni Research lowering their year-end targets for the benchmark. However, all three still expect the index to finish the year higher than where it ended Monday.

Market participants are positioning for another solid stretch of performance for Treasuries after signs of cooling US growth drove a first-quarter rally.

Rising potential for a US recession has Pacific Investment Management Co. touting the attractiveness of “stable sources of returns” in global bonds. The bond manager warned that Trump’s aggressive trade, cost-cutting and immigration policies stand to slow the world’s biggest economy by more than previously expected.

In commodities, oil paused last month’s rally as traders positioned themselves for the tariff announcements. Gold steadied as the market took a break from a record-setting run.

Some of the main moves in markets:

Stocks