Asian stock markets traded within a narrow range on Friday, with investors remaining cautious ahead of President Donald Trump’s next move in the ongoing trade war. This followed a turbulent week of central bank meetings that added to investor nervousness.
Early trading saw declines in shares in Hong Kong and South Korea, while Japan’s stock market posted gains and mainland China saw slight increases. US futures rose modestly after the S&P 500 closed lower on Thursday, reflecting a sense of caution among investors.
Mixed Reactions to Central Bank Signals
The global stock rebound that began earlier in the week stalled, highlighting investor unease as the April 2 tariff deadline approaches. President Trump had announced that both broad reciprocal tariffs and additional sector-specific tariffs would take effect on that date.
Despite a busy week of policy meetings from the Federal Reserve, the Bank of Japan, and the Bank of England, these central banks all pointed to the tariffs as a key uncertainty clouding the global economic outlook. This only deepened concerns that markets are entering a period of instability ahead of the tariff increase.
Rising Uncertainty Fueled by Tariff Talks
Todd Jablonski, global head of multi-asset and quantitative investments at Principal Asset Management, highlighted the impact of President Trump’s policies on market uncertainty. He told Bloomberg Television that the tariffs have created waves of unpredictability, leading the firm to reduce risk in its portfolios.
Meanwhile, the European Union delayed a planned tariff on American whiskey, opting instead to engage in talks with Trump before making any further decisions on retaliatory tariffs, according to Ireland’s deputy prime minister.
Mixed Economic Data Adds to Market Jitters
Investors also digested a mixed batch of economic data and corporate earnings. Existing home sales in the US exceeded expectations, while initial jobless claims matched forecasts, signaling a healthy labor market.
However, FedEx Corp. saw its stock drop after cutting its profit outlook due to rising costs and signs of slowing demand. Nike Inc. also flagged the impact of tariffs and global tensions on its earnings.
On a positive note, US-listed shares of PDD Holdings Inc. rose after reporting earnings above expectations, though its revenue came in below forecasts. The company, which operates the Temu online marketplace, acknowledged the challenges posed by growing global uncertainty.
Focus Turns to Asia and Economic Data
In Asia, investors will keep an eye on upcoming economic data, including trade and international reserves for Thailand and inflation figures for Malaysia.
Volatility Expected as Options Expiry Looms
US Treasuries remained largely unchanged on Friday, and the dollar index held steady. The yen weakened after consumer inflation slowed, while the pound stayed under pressure after the Bank of England held rates steady.
Weakness in US markets was also tied to the approaching expiration of $4.5 billion in options contracts, a phenomenon known as “triple witching,” which often causes increased volatility.
Market Volatility Likely to Continue
Michael Rosen, chief investment officer at Angeles Investments, warned of continued volatility in the markets due to ongoing policy uncertainty. “Investor sentiment is going to be very volatile, and that will be reflected in the market,” he said in an interview with Bloomberg.
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