Global Markets Wary of U.S. Shifts in China Trade Policy: Global markets are navigating a turbulent period
marked by volatility and shifting valuations,
fueled by conflicting signals from President Donald Trump’s administration regarding trade and monetary policy.
Against this backdrop, global equities, commodities,
and currencies have experienced cautious gains and pullbacks driven by rising uncertainty.

Contents

Asian Equities

Currency Movements

U.S. Policy

Asian Market

Commodity Markets

Corporate Earnings

Investment Caution

Asian Equities Trade in Narrow Range with Limited Momentum

Asian stocks traded within a narrow band on Thursday,
as the gap between bid and ask prices narrowed following a wave of investor-driven gains.
However, optimism faded quickly as momentum waned and markets grew skeptical
of the Trump administration’s new approach,
particularly after U.S. Treasury Secretary Steven Mnuchin remarked on trade negotiations with China.

The regional stock index swung between minor gains and losses,
while the S&P 500 rose 1.7%, trimming earlier gains that reached as high as 3.4%.
Globally, equities and Treasury bonds posted gains,
and market volatility eased somewhat following Trump’s signs of a potentially more flexible policy stance.

Currency Movements and Safe-Haven Assets

The Japanese yen recovered after two days of losses in currency markets,
while the U.S. dollar weakened in early Asian trading before rebounding against most major currencies.

As for safe-haven assets, gold surged 1.4% amid rising demand as a traditional hedge during uncertainty,
before pulling back slightly. Meanwhile, Bitcoin climbed as investors rotated out of gold.

U.S. Policy: Gradual Shift or Tactical Play?

Despite Trump hinting at a desire to strike a “fair deal” with China and reports suggesting
The U.S. might ease tariffs gradually over five years,
Mnuchin denied any plans for a unilateral tariff rollback.
He emphasized that the administration is evaluating multiple issues beyond tariffs,
including non-tariff barriers and state subsidies,
and communications with Beijing are happening at the highest levels, with no defined timetable.

Kyle Rodda of Capital.com noted that the administration appears highly responsive to market performance,
citing decisions like the 90-day tariff delay and backing off from removing Fed Chair Jerome Powell.

Chinese Bonds and Regional Stimulus Measures

In Asia, China is preparing to issue its first batch of sovereign bonds for 2025,
worth 286 billion yuan (approximately $39 billion),
as part of a stimulus package to soften the impact of ongoing trade tensions with the U.S.

Commodity Markets: Oil and Gold Under Watch

Oil prices stabilized at lower levels as investors assessed the possibility of increased supply from the OPEC+ alliance,
amid ongoing trade uncertainties.
As noted earlier, gold fluctuated between gains and losses depending on investor appetite for safe versus risk assets.

Corporate Earnings Boost Risk Appetite

The corporate earnings season began on a strong note.
Boeing posted results that beat expectations,
while Tesla shares rose after Elon Musk pledged to significantly scale back his government involvement.
Texas Instruments offered upbeat forecasts, and IBM reported earnings that exceeded analyst estimates.

Cautious Investment Climate Despite Individual Buying Spree

Despite the recent gains, the S&P 500 remains below its levels from April 2,
when Trump unveiled his tariff plans—an announcement that triggered significant market turbulence.

According to JPMorgan Chase’s Emma Wu, while retail investors have poured over $30 billion
into U.S. equities and ETFs since April 2, professional fund managers have leaned into hedging strategies.
Clearing firms have also responded to volatility.

CME Clearing, a subsidiary of CME Group,
raised initial margin requirements for E-mini S&P 500 futures contracts by up to 30% in April,
including a single-day jump of 12%—the highest increase since the post-COVID market rebound, according to Bloomberg data.

Global Markets Wary of U.S. Shifts in China Trade Policy

Global Markets Wary of U.S. Shifts in China Trade Policy

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