Markets Overview

  • ASX SPI 200 futures up 0.2% to 7,788.00
  • Dow Average up 0.8% to 40,524.79
  • Aussie up 0.6% to 0.6326 per US$
  • US 10-year yield fell 12.0bps to 4.3720%
  • Australia 3-year bond yield rose 5.3 bps to 3.35%
  • Australia 10-year bond yield rose 0.5 bps to 4.40%
  • Gold spot down 0.8% to $3,210.37
  • Brent futures up 0.2% to $64.92/bbl

Economic Events

  • 11:30: (AU) RBA Minutes of April Policy Meeting

Asian stocks are poised for a cautious opening after White House plans to impose tariffs on semiconductor and pharmaceutical imports pushed US futures down.

S&P 500 futures fell 0.4% in early trading after the index gained almost 1% on Monday as President Donald Trump’s administration signaled a reprieve on consumer electronic tariffs. Treasuries snapped a five-day slide that drove 10-year yields up by the most in over two decades. Stock futures in Tokyo, Hong Kong and Sydney pointed to modest gains on Tuesday.

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. They could take months to play out.

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 while on a visit to Buenos Aires, Argentina. He pointed to what he said was increased foreign demand at auctions for 10-year and 30-year Treasury securities last week.

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.

“As we begin this week, again, traders will be fixated to social-media feeds and the newswires for the latest on this never ending saga of ‘tariffs-on, tariffs-off’,” said Jay Woods at Freedom Capital Markets. “One thing the current administration has been great at is keeping market participants on their toes.”

Strategists at BlackRock Inc.’s research arm said they are dialing up their risk-taking and embracing US and Japanese stocks following the Trump administration’s 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.”

Japan’s super-long government bond yields surged on Monday on speculation that authorities will order an extra budget draft in response to tariffs. The 20-year yield soared seven basis points to 2.435%, its highest level since 2004, while the 30-year rate jumped 12 basis points to 2.845%.

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.

Policymakers are closely monitoring a variety of similar gauges to assess whether Trump’s sweeping tariffs will result in more persistent price growth. While many economists forecast the duties to boost inflation — at least in the near-term — tariff threats so far haven’t changed consumers’ views over the long term.

Fed 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.