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Shares climbed from the open in Australia, Japan and South Korea, while futures pointed to similar gains in Hong Kong. US futures extended their rally from Monday when the cash market was closed for a holiday. Asian currencies strengthened after Bloomberg’s gauge of the dollar slid more than 1% Monday. Treasuries advanced.
After being sworn into office, Trump promised to sign a series of executive orders, including one that declares a national emergency at the U.S.-Mexico border. For now though, the executive action will not include new tariffs on the three biggest US trading partners. The president instead ordered his administration to address unfair trade practices globally, suggesting he will take a more deliberative approach to trade relations.
“The fact that we’re seeing signs of a more conciliatory relationship between the US and China, and the fact there could be a more tactful application of tariffs is great for the region,” said Kyle Rodda, a senior analyst at Capital.com in Melbourne. “Trump is pretty mercurial and it all could change in a Twitter post, but for now it’s filling investors with confidence that the worst of the trade war may not materialize.”
Investors had been on tenterhooks for the first executive orders to stem from the White House after Trump vowed to quickly implement his “America First” agenda. Since his November election victory, everything from the Australian dollar to European equities have been whipsawed on concern widespread tariffs would add to global trade frictions, while the dollar surged as the Federal Reserve turned more cautious on easing policy.
An index of Asian currencies this month fell to a record low in data starting in 2006 amid broad greenback strength, while the region’s central banks turned dovish to shore up their economies amid concern economic growth would be crimped.
Betting on the dollar has become one of Wall Street’s favored trades for those investors expecting that sweeping trade tariffs will crimp global growth, lift US inflation and potentially cause the Fed to refrain from lowering borrowing costs this year.
Monday’s whipsaw moves in equity futures and currencies were seen as providing a foretaste of the uncertainty and volatility to come.
“As much as there is relief today in markets there’s probably now going to be greater volatility going forward,” said Brad Bechtel, head of foreign exchange at Jefferies LLC. “In some ways, it might have been better if we got whatever we were going to get on day one.”
Shares in a number of sectors across Asia from electric cars to China-exposed companies and cryptocurrency stocks may see extra volatility Tuesday as they respond to the start of Trump’s presidency.
Chinese property developers will also be in focus after Bloomberg reported officials are taking steps to stabilize operations at China Vanke Co. Trading in three of Vanke’s yuan bonds was halted Monday after prices surged 20% or more following the report that officials of Shenzhen, the southern metropolis where Vanke is based, held a closed-door meeting to discuss the company on Friday.
In commodities, oil slumped after Trump said he plans to invoke emergency powers boost domestic crude production and held off on tariffs that may have restricted supplies. A shift away from renewable energy sources sparked declines in Siemens Energy AG, Enel SpA and Vestas Wind Systems A/S.
Bitcoin retreated from a record high amid heightened swings in crypto markets around Trump’s inauguration.
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