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StreetAccount Summary - Asian Market Recap: Nikkei (2.75%), ASX 200 (2.44%), Kospi (0.86%) as of 04:10 ET

Apr 04 ,2025

• Synopsis:

  • Asia equities ended sharply lower for a second consecutive day Friday. More steep declines in Japan and Australia, with Singapore also down sharply as its chip and shipbuilding stocks weighed. South Korea lower but off its lows after President Yoon's impeachment was upheld. Sharp declines in India and Southeast Asia, with Vietnam again the underperformer in the region. Greater China, Taiwan and Indonesia exchanges all closed for a holiday. US futures down, Europe with more losses in the first hour of trade. US dollar DXY index hovering at overnight lows at 101.5. AUD and NZD reversing early gains, now steeply lower; offshore yuan strengthening, yen now stronger after early weakness. Treasuries mixed, JGB yields down again. Precious metals down, copper leading metals lower again, oil blends taking another leg lower after surprise OPEC+ decision on strategy.

  • More substantial losses for Asia benchmarks today with few signs of retreat or compromise from the White House, and fears gathering over imminent retaliatory moves that could escalate the situation. Retaliatory measures less likely from Asia nations with several already pledging to buy more US made goods and/or negotiate further with the US. Nevertheless, markets reacted negatively for second consecutive day with Japan's boards ending Friday as the region's w/w underperformer as banks cratered under the weight of sharply lower JGB yields.

  • China's markets closed today for a holiday but plenty of discussion over whether US tariffs could be eased on a sale of TikTok assets. Trump overnight also repeated tariffs on chips and pharmaceuticals to come soon, which dragged on Australia, Singapore and South Korea stocks today. Economists see overall tariff program to be a drag on regional growth with added upside inflation risks. Focus now turns to Fed Chair Powell's comments and US payroll data later Friday.

  • In other developments, Japan household spending declined for the first time in three months although beat forecasts. Australian February household spending growth fell by more than expected following RBA's rate cut. The BOJ warned US tariffs added uncertainty to Japan's economic outlook and signaled caution in policy. Singapore's government warned it may have to trim its FY GDP growth outlook on Trump's tariffs just as data showed retail sales unexpectedly falling in February. Thailand's inflation rate dipped below 1% with deflation evident in components.

  • Intel and TSMC (2330.TT) have tentatively reached an agreement that may see TSMC operating Intel's chipmaking facilities through a new joint venture. Nissan Motor (7201.JP) has suspended US orders for its Infiniti SUV built in Mexico following Trump's tariffs. Hanwha Aerospace (012450.KS) signed a $253M deal with India to export its howitzers.

• Digest:

  • Trump open to talks on tariffs as other countries weigh their response:

    • Some hope remains for a tamping down of tensions after Trump said Thursday that he is open to talks if he receives "phenomenal" offers, noting he had earlier been fielding calls from other countries (Bloomberg). Remarks added to confusion surrounding notion of 'tariffs as a negotiating tactic' after Washington Post article highlighted internal White House directive that tariffs are not a starting point for talks. Trump restated openness to China tariff relief in return for deal on TikTok (Bloomberg). However, also repeated tariffs on chips and pharmaceuticals coming soon. Earlier, Commerce Secretary Lutnick pushed for other countries to reevaluate their tariffs and non-tariff trade barriers (CNN). Countries have offered olive branches in form of reduced import duties and promises of increased US investment and purchases of American goods, and some including India and South Korea are seeking negotiations with US (FT). At same time countries warning of retaliation with Canada imposing 25% tariffs on non-USMCA US autos. EU warned of a response if tariffs not withdrawn with France's Macron calling for suspension of US investment (Reuters). China called on Trump to withdraw his additional 34% tariff or face countermeasures (Reuters).

  • Reciprocal tariffs pose downside risk to Asian economies:

    • Economist reactions note reciprocal tariffs aimed at Asia nations were harsher than feared, posing clear downside risks growth and dovish implications for monetary policy (Bloomberg). Along with direct hit to exports, depressed business confidence seen translating to pullback in investment, particularly if followed by tit-for-tat retaliation. Expected global trade slowdown seen impairing ability of exporters to find alternative destinations. China facing significant headwinds with UBS estimating 1.5% hit to growth, increasing downside risk to its 2025 GDP growth estimate of 4%. Tariffs reinforced policy support expectations with economists eyeing quicker NPC stimulus rollout, RRR and policy rate cuts. However, also view stimulus may not be enough to fully offset magnitude of latest tariff hike with UBS estimating government needs to broaden fiscal support by another 1-1.5% of GDP to stabilize growth. Goldman Sachs revised down its Japan GDP growth estimate by 0.2%,reflecting larger drag from external demand. Morgan Stanley flagged significant impact on Korea and Taiwan with their US-bound exports contributing 30% and 40% respectively to marginal export growth over recent years. UBS saw downside risks to India GDP but noted potential for US trade deal to mitigate impact.

  • Some talk tariffs might prompt lower foreign purchases of US Treasuries:

    • Bloomberg discussed the emergence of speculation that Trump tariffs might compel foreign countries to scale back purchases of US Treasuries. Topic places spotlight on next round of FX reserves data out of China and Japan, which are among the largest holders and also given tariffs were heavily focused on Asia. TIC data has shown China pared holdings for three straight years while Japan totals have also dropped. Article noted this element adds to rigorous debate on the outlook for US interest rates amid trade tensions and global growth impacts. Cited Barclays' view that foreign demand is likely to decline given policies are geared towards reducing the external imbalance. Story recalled US-China tensions often fueled speculation Beijing would accelerate a shift in foreign reserves away from US, though many analysts have argued Treasuries remain an almost irreplaceable component of a global portfolio. Such a pivot faces opportunity costs as Treasury returns of 6% in the past year outperformed a 5.1% aggregate among global investment grade debt based on Bloomberg indexes. Outlook remains positive as Fed rate cut bets rise.

  • BOJ Governor Ueda monitoring tariff fallout:

    • Nikkei cited BOJ Governor Ueda's discussions in the lower house financial affairs committee, remarking that US reciprocal tariffs will be a negative factor for global and Japan's economies. Noted that elevated uncertainties surrounding global trade and policies could impact household/corporate sector sentiment as well as markets. While suppressed growth would work to lower inflation, supply chain disruptions could have the opposite effect. On policy implications, Ueda emphasized they would monitor financial market impacts and conduct policy accordingly. Asked what the response would be in the event of an economic fallout, Ueda replied he thinks a major change in the external environment would prompt adjustments to their economic outlook. Earlier in the discussion, Deputy Governor Uchida repeated core guidance that policy adjustments would continue if the economy continued to recover and tracked in line with their forecasts.

  • South Korea Constitutional Court unanimously upholds President Yoon's impeachment:

    • South Korea's President Yoon Suk Yeol's impeachment upheld by country's constitutional court Friday, triggering his immediate removal from office and snap presidential election to be held within 60 days. Court said Yoon's declaration of martial law did not meet legal requirement for national crisis, he did not follow procedure, and he had sent troops to assembly for his own political goal. Said martial law 'damaged people's political rights...Yoon went against those he was supposed to protect'. Judges vote unanimous. Yoon's ruling party said it accepted verdict (Yonhap). Decision announced four months after Yoon's declaration of martial law, subsequent arrest and impeachment by opposition-controlled National Assembly. Case centered on declaration of martial law, writing up martial law decree, deploying troops to national assembly, raising national election commission, attempting to arrest politicians (Yonhap). Market reaction to verdict swift with won strengthening sharply but equity market, which had opened brightly, paring gains to trade lower.

  • Notable Gainers:

    • +10.7% 336260.KS (Doosan Fuel Cell): Signs MoU with Samchully

    • +5.2% 8016.JP (Onward Holdings): Reports FY net income attributable ¥8.52B, +29% vs year-ago ¥6.61B; March sales +23.1% y/y

    • +4.3% 9735.JP (SECOM Co.): To begin servicing security robots on public roads this spring

  • Notable Decliners:

    • -12.9% 3498.JP (Kasumigaseki Capital): Reports H1 net income attributable ¥2.45B, +90% vs year-ago ¥1.29B

    • -7.6% 4612.JP (Nippon Paint Holdings): Guides FY net income attributable ¥162.00B vs prior guidance ¥134.00B and FactSet ¥156.68B

    • -4.7% 267270.KS (HD Hyundai Construction Equipment Co.): Termination of production at China plant

    • -3.5% 5E2.SP (Seatrium): Settlement of EIG litigation

• Data:

  • Economic:

    • Japan February

      • Household spending (0.5%) y/y vs consensus (1.7%) and +0.8% in prior month

        • Spending +3.5% m/m vs consensus +0.5% and (4.5%) in prior month

    • Australia February

      • Household spending +0.2% m/m vs +0.4% in January

        • Household spending +3.3% y/y vs and +2.9% in January

    • Singapore February

      • Retail Sales Nominal NSA Y/Y (3.6%) versus +4.7% in prior month

  • Markets:

    • Nikkei: (955.35) or (2.75%) to 33780.58

    • Hang Seng: Closed

    • Shanghai Composite: Closed

    • Shenzhen Composite: Closed

    • ASX200: (191.90) or (2.44%) to 7667.80

    • KOSPI: (21.28) or (0.86%) to 2465.42

    • SENSEX: (757.60) or (0.99%) to 75537.76

  • Currencies:

    • $-¥: +0.18 or +0.13% to 146.2430

    • $-KRW: (9.56) or (0.66%) to 1442.1100

    • A$-$: (0.01) or (1.82%) to 0.6214

    • $-INR: (0.04) or (0.05%) to 85.2373

    • $-CNY: (0.00) or (0.01%) to 7.2806