SINGAPORE — Asia-Pacific markets were subdued at the start of trade on Tuesday, as investors weighed in on a possible thaw in U.S.-China trade relations as U.S. President Joe Biden floated the idea of tariff cuts on Chinese products.
In Japan, the Nikkei 225 was down 0.4% in early trading, while the Topix was down 0.2%. The South Korean Kospi fell 0.39%.
In Australia, the S&P/ASX 200 was just slightly below the flatline. MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.11%.
In economic data for the day ahead, Japan is expected to release data on its manufacturing activity for May.
Markets appeared to take the news as indicative of a potential thaw in trade tensions between the United States and China, although it was not the first time that tariff cuts have been announced.
Taylor Nugent
Economist, National Australia Bank
As consumer prices rose, the White House said last month it was reviewing how those tariffs had contributed to inflation.
These tariffs came into effect in 2018 when the Trump administration imposed tariffs on billions of dollars worth of Chinese goods and Beijing retaliated with similar punitive measures, dragging the two sides into a protracted trade war.
“Markets appeared to view the news as indicative of a potential thaw in U.S.-China trade tensions, although this is not the first time tariff cuts have been announced,” wrote Taylor Nugent, an economist at National Australia Bank. “While a cut in tariffs would help dampen U.S. inflation at the margin, reports suggest administration officials are concerned about appearing soft on China ahead of November’s congressional elections. »
In other trade news, the United States on Monday announced the Indo-Pacific Economic Framework with Asian partners including Australia, Japan and South Korea. The group wants to set international rules on the digital economy, supply chains, decarbonization and regulations for workers.
Currencies and Oil
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 102.191, falling from levels just above 102 earlier.
The Japanese yen was trading at 127.74 to the dollar, as it strengthened slightly from levels around 127.8 previously. The Australian dollar was at $0.708, falling from around $0.704 earlier.
Oil prices were lower in morning trading hours in Asia, with international benchmark Brent futures falling 0.51% to $112.84 a barrel. U.S. crude futures slid 0.5% to $109.73 a barrel.
– CNBC’s Ted Kemp contributed to this report.
