Markets Overview

  • ASX SPI 200 futures down 0.6% to 8,524.00
  • Dow Average down 0.9% to 44,406.36
  • Aussie down 1.0% to 0.6490 per US$
  • US 10-year yield rose 3.3bps to 4.3794%
  • Australia 3-year bond yield fell 2 bps to 3.31%
  • Australia 10-year bond yield fell 0.9 bps to 4.18%
  • Gold spot little changed at $3,336.48
  • Brent futures up 1.8% to $69.55/bbl

Economic Events

  • 11:30: (AU) June NAB Business Conditions, prior 0
  • 11:30: (AU) June NAB Business Confidence, prior 2
  • 14:30: (AU) July RBA Cash Rate Target, est. 3.60%, prior 3.85%

Asian stocks face renewed pressure Tuesday after President Donald Trump announced higher tariffs on key regional trading partners including Japan and South Korea.

Stock futures pointed to declines in Tokyo and Sydney, after Wall Street equities fell from all-time highs and the dollar climbed. US equity contracts dropped in early Asia trading.

Megacaps led losses in the US on Monday as Tesla Inc. tumbled nearly 7% after Elon Musk announced he’s formed a political party, raising concern about his company’s outlook. Treasuries dropped, with longer-dated bonds underperforming. Emerging markets got hit as Trump warned he’d add extra tariffs on countries aligning with “the Anti-American policies of BRICS.”

Trump released the first in a series of tariff warning letters, just two days before agreements are due on countries facing his April 2 so-called reciprocal levies. The new rates include 25% duties on goods from Japan, South Korea, and Malaysia; 32% on Indonesia; 35% on Bangladesh; 36% on Thailand and Cambodia; and 40% on Laos and Myanmar.

“There is likely to be considerable concern in Asia that 90 days of supposed negotiations have so far produced many US tariff rates similar to the April 2 shock,” said Sean Callow, a senior analyst at InTouch Capital Markets in Sydney. “The US clearly only has bandwidth for negotiation with a handful of trading partners, with the rest seemingly blamed for failing to reach a deal.”

The yen slid over 1% against the dollar in New York trading overnight. Despite the market turmoil from Trump’s tariffs, Japanese shares have rebounded from April lows, reflecting optimism that Japan and others will strike US deals that avoid derailing growth.

White House Press Secretary Karoline Leavitt said there would be around a dozen countries that receive notifications about their tariffs Monday directly from the president. Additional letters will be sent in the coming days, she said.

“Investors should be alert to headline risk,” said Fawad Razaqzada at City Index and Forex.com. “The scope for last-minute deals is high, but so too is the possibility of renewed trade tensions.”

Analysts said that one positive to be taken away from the latest trade developments was that the higher tariffs won’t be in place during July. That means “an indirect extension” of the original 90-day pause that would expire on Wednesday.

“The outcome could certainly have been more dire for the economic outlook had the additional window of relief not been included in the latest trade-war salvo,” they noted.

The European Union is not expecting to receive a letter setting tariff rates imminently, according to a person familiar with those discussions. The EU is seeking to conclude a preliminary deal this week that would allow it to lock in a 10% tariff rate beyond an Aug. 1 deadline as they negotiate a permanent agreement.

Meantime, Treasury Secretary Scott Bessent told CNBC said he expected to meet with his Chinese counterpart in the coming weeks.

Indian officials familiar with the matter said the nation had made its best offer on trade and the fate of an interim deal now lies in the hands of Trump. Negotiators conveyed to Washington the red lines they were unwilling to breach in finalizing an agreement, including allowing the US to export genetically modified crops to India, and opening up India’s dairy and automobile sectors to America.

In Rio de Janeiro, several leaders responded to Trump’s tariff threats against the 10-member BRICS group. Brazilian President Luiz Inacio Lula da Silva joined South Africa in blasting the US president.

So far, the US economy is holding up under the threat of a spiralling global trade war. Hiring is healthy, and inflation has remained tame. But the Federal Reserve is wary about tariffs despite pressure from Trump to lower rates, and wants to see how they feed through to output in the next few months.

Elsewhere, oil rose on Monday as Saudi Arabia surprised customers in Asia by hiking prices for its main crude grade, a vote of confidence that the market can absorb extra OPEC barrels.