Stocks advance as investors stay calm against tariff rhetoric

Stock markets in emerging Asian economies pressed forward on Thursday, led by South Korea, as investors took in stride US President Donald Trump’s latest tariff salvos, betting the most damaging scenarios were unlikely to materialize.

An MSCI gauge of emerging Asian equities inched higher, supported by stocks in South Korea, which jumped 1.6% to a near four-year high, and Taiwan stocks, which advanced 0.8%.

A subset of ASEAN equities jumped to a two-week high. Singapore stocks, which account for nearly half of the index, hit a new high for the seventh consecutive session, driven by strong inflows into industrials, telecom, and banks.

Investors dismissed Trump’s latest tariff threats as rhetoric, expecting them to be a tactic to extract more concessions from trade partners, said analysts.

“Since Trump took office, he has created a lot of noise in the market. But compare that noise today with three months ago; it is no longer creating that kind of volatility,” said Ernest Chew, head of ASEAN equities at BNP Paribas Asset Management.

“Investing in ASEAN will remain focused on a very bottom-up approach. If we see opportunities, we will continue to put the trickles on. If there is a sector or a company that we think is very attractive, we will start to do some bottom-fishing.”

Market participants will keenly scrutinize headlines from the trade negotiations between emerging economies and the United States. Eyes are on US Secretary of State Marco Rubio’s first visit to Asia during an ASEAN summit in Kuala Lumpur on Thursday.

Most EM Asia currencies rebounded as the dollar slipped from a two-week high scaled in the previous session. Analysts believe that while Trump’s tariff letters exerted pressure on currencies, the reaction was much less dramatic than in April.

In the lead were the Philippine peso PHP= and Thailand’s baht, firming 0.4% each against the US dollar.

Malaysia’s ringgit erased early gains to trade largely flat. The country’s central bank slashed its key interest rate for the first time in five years on Wednesday, citing trade-related risks to growth.

A fortnightly survey by Reuters showed traders trimmed their long positions in most Asian currencies as Trump’s threats to ramp up tariffs dampened appetite for risk assets, although such bets on the Taiwan and Singapore dollars shot up.

Among stock markets, Indonesia jumped to a three-week high in its fourth straight session of gains. Malaysia turned flat in the afternoon session, while the Philippines slipped further to finish 0.6% in red.

HIGHLIGHTS:

** Indonesia’s 10-year benchmark yield at 6.585%

** A FTSE ASEAN index dominated by banks up 0.6%, few points short of six-week high

** Indonesia, US eye wider critical minerals partnership after ‘positive’ meeting

** Thai stock market closed for holiday

Asia stock indexes and currencies at 0710 GMT
COUNTRY	FX RIC	FX DAILY %	FX YTD %	INDEX	STOCKS DAILY %	STOCKS YTD %
Japan	JPY=	+0.08	+7.51	.N225	-0.44	-0.62
China	CNY=CFXS	+0.07	+1.71	.SSEC	0.53	4.76
India	INR=IN	+0.13	+0.06	.NSEI	-0.32	7.40
Indonesia	IDR=	+0.12	-0.80	.JKSE	0.61	-1.32
Malaysia	MYR=	-0.05	+5.13	.KLSE	0.13	-6.77
Philippines	PHP=	+0.35	+2.94	.PSI	-0.63	-1.00
S.Korea	KRW=KFTC	+0.31	+7.39	.KS11	1.58	32.66
Singapore	SGD=	+0.11	+6.76	.STI	0.41	7.57
Taiwan	TWD=TP	-0.29	+12.13	.TWII	0.74	-1.48
Thailand	THB=TH	+0.37	+5.38	.SETI	–	-20.70

(Reporting by Sameer Manekar in Bengaluru; Editing by Mrigank Dhaniwala and Subhranshu Sahu)

US yields drop after strong 10-year auction

US Treasury yields fell on Wednesday after the Treasury saw strong demand for a USD 39 billion sale of 10-year notes, indicating that concerns about investors stepping away from the market appear so far to be unfounded.

The 10-year auction priced with a high yield of 4.362%, around half a basis point below where it had traded before the sale. Demand was 2.61 times the amount of debt on offer, the highest since April.

“It was digested pretty easily and it shows that there is appetite for Treasuries. The ‘Sell America’ thinking has diminished considerably,” said Kim Rupert, managing director at Action Economics in San Francisco.

A worsening fiscal outlook has raised concerns about increased US debt supply in coming years. Uncertainty over the impact of tariffs and other Trump administration policies is also seen as potentially crimping foreign demand for US assets.

So far, however, there has been no clear signs that foreign investors are turning away from Treasuries. Longer-dated debt is also being supported by comments by Treasury Secretary Scott Bessent that there are no plans to increase longer-dated auction sizes at current interest rates.

“The market has a track record of digesting supply well and the Treasury Secretary continues to communicate that coupon issuance will be well managed,” said Michael Lorizio, head of US rates trading at Manulife Investment Management in Boston.

A USD 58 billion three-year note auction on Tuesday saw slightly soft interest. The government will sell USD 22 billion in 30-year bonds on Thursday.

The yield on benchmark US 10-year notes was last down 7.7 basis points on the day at 4.34%.

Interest rate-sensitive two-year note yields fell 4.7 basis points to 3.862%.

The yield curve between two-year and 10-year notes flattened by around three basis points to 48 basis points.

US President Donald Trump issued final tariff notices to seven minor trading partners on Wednesday as his administration inched closer to a deal with its biggest trading partner, the European Union.

The prospect of higher price pressures from tariffs is seen keeping the Federal Reserve on hold while the labor market remains relatively solid.

“As long as we’re relatively subdued in terms of the unemployment rate, I think that the Fed feels emboldened to wait to see what the inflation impact is before they make any changes,” said Lorizio. “That just puts on hold any sort of positioning for rate cuts.”

Traders pared bets on how many times the Fed will cut rates this year after jobs data on Thursday showed employers added more jobs than expected in June.

Minutes from the Fed’s June 17-18 meeting released on Wednesday showed that only “a couple” of officials felt interest rates could fall as soon as this month, with most policymakers remaining worried to some degree about inflationary pressures from tariffs.

(Reporting by Karen Brettell, Editing by Franklin Paul and Nick Zieminski)

Oil steady on strong gasoline demand, Red Sea attacks while Trump tariffs loom

HOUSTON – Oil prices were steady on Wednesday as investors weighed strong US gasoline demand data and attacks on shipping in the Red Sea, while US copper tariffs loomed.

Brent crude futures settled up 4 cents, or 0.06%, to USD 70.19 a barrel. US West Texas Intermediate crude settled up 5 cents, or 0.07%, to USD 68.38 a barrel.

US crude stocks rose while gasoline and distillate inventories fell last week, the Energy Information Administration said on Wednesday.

Crude inventories rose by 7.1 million barrels to 426 million barrels in the week ended July 4, the EIA said, compared with analysts’ expectations in a Reuters poll for a draw of 2.1 million barrels.

Gasoline demand rose 6% to 9.2 million barrels per day last week, the EIA said.

“Demand seems to be solid and not slowing down,” said Phil Flynn, senior market analyst with Price Futures Group.

After months of calm in the Red Sea, attacks in the major global shipping lane were renewed in the past week. Rescuers pulled six crew members alive from the Red Sea on Wednesday and 15 were still missing from the second of two ships sunk in recent days in attacks claimed by Yemen’s Iran-aligned Houthi militia after months of calm.

Oil prices were also supported by an EIA forecast on Tuesday that the US will produce less oil in 2025 than previously expected, as declining prices have prompted US producers to slow activity.

On Tuesday, US President Donald Trump said he would impose a 50% tariff on copper, aiming to boost US production of a metal critical to electric vehicles, military hardware, the power grid and many consumer goods.

Trump made the announcement as he delayed a deadline for some tariffs to August 1, spurring hopes among major trade partners that deals to ease duties could still be reached, though many remain uncertain.

Elsewhere, OPEC+ oil producers were set for another big output boost for September as they complete both the unwinding of voluntary production cuts by eight members, and the United Arab Emirates’ move to a larger quota, five sources said.

On Saturday, OPEC+ approved a supply increase of 548,000 barrels per day for August.

“Oil prices have stayed surprisingly resilient in the face of accelerated OPEC+ supply additions,” said Suvro Sarkar, energy sector team lead at DBS Bank.

UAE Energy Minister Suhail al-Mazrouei said on Wednesday that oil markets were absorbing OPEC+ production increases without building inventories, which means they are thirsty for more oil.

“You can see that even with the increases for several months we haven’t seen a major buildup in inventories, which means the market needed those barrels,” he said.

(Reporting by Georgina McCartney in Houston, Paul Carsten in London, Arathy Somasekhar in Houston, and Trixie Yap in Singapore; Editing by Rachna Uppal, Bernadette Baum, Joe Bavier, Sharon Singleton, Paul Simao, David Gregorio, and Rod Nickel)

Nvidia’s stock market value hits USD 4 trillion on AI dominance

Nvidia briefly reached a market capitalization of USD 4 trillion on Wednesday, making it the first company in the world to reach the milestone and solidifying its position as one of Wall Street’s most-favored stocks.

Shares of the leading chip designer rose as much as 2.8% to an all-time high of USD 164.42, benefiting from an ongoing surge in demand for artificial-intelligence technologies.

The company’s stock ended with a gain of 1.80%, leaving it with a market value of USD 3.97 trillion.

Nvidia’s soaring market value underscores Wall Street’s confidence in the rapid growth of AI, with the company’s high-performance chips forming the backbone of this technological advance.

“It highlights the fact that companies are shifting their asset spend in the direction of AI and it’s pretty much the future of technology,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in New York.

The stock’s recent rally follows a sluggish start to the year, when the emergence of a Chinese discount artificial-intelligence model developed by DeepSeek shook confidence in stocks linked to the sector.

Nvidia achieved a USD 1 trillion market value for the first time in June 2023 and tripled it in about a year, faster than Apple and Microsoft, the only other US firms with market values above USD 3 trillion.

Microsoft is the second-most valuable US company, with a market capitalization of USD 3.74 trillion. Its shares gained 1.4% on Wednesday to close at USD 503.51.

Nvidia has rebounded about 74% from its lows in April, when global markets were jolted from US President Donald Trump‘s tariff volley.

Optimism around trade partners reaching deals with the US has lifted stocks of late, with the S&P 500 hitting an all-time high.

Nvidia accounts for 7.3% of the S&P 500. Apple and Microsoft account for around 7% and 6%, respectively.

Nvidia is now worth more than the combined value of the Canadian and Mexican stock markets, according to LSEG data, and it exceeds the total value of all publicly listed companies in the UK.

Its stock recently traded at a 12-month forward price-to-earnings ratio of 32, below its three-year average of 37, according to data compiled by LSEG.

While Nvidia’s chips dominate the AI industry, Amazon, Microsoft, Alphabet, and other major customers have faced pressure from investors to rein in their heavy spending on AI.

As well, Advanced Micro Devices and other rivals aim to take some of Nvidia’s market share by selling lower-cost processors.

Nvidia reported total revenue of USD 44.1 billion in the first quarter, marking a 69% jump from a year ago.

For the second quarter, Nvidia expects revenue of USD 45 billion, plus or minus 2%. It will report second-quarter results on August 27.

Including the session’s gains, Nvidia is up about 22% this year compared with a nearly 15% rise in the Philadelphia SE Semiconductor Index.

(Reporting by Shashwat Chauhan and Johann M Cherian in Bengaluru; Additional reporting by Noel Randewich in San Francisco; Editing by Chuck Mikolajczak, Arun Koyyur, and Matthew Lewis)

China Inc. bets Beijing will keep tight grip on yuan as US tariff fears persist

Chinese businesses and investors are primed for the yuan to stay steady for now and eventually depreciate as US trade tensions drag on, and a string of measures and hints from monetary authorities suggest they may be on the money.

A growing pile of foreign exchange deposits at banks and a rise in currency swaps show Chinese corporates and households are wagering they can exchange their dollars for more yuan if they wait.

That conviction, in the face of the US dollar’s broad-based slide against most other currencies, is driven for the most part by central bank’s efforts to keep the currency steady and even encourage more investment offshore.

It also shows the People’s Bank of China (PBOC) is in a bind. A sudden yuan move in either direction could trigger a wave of selling of billions of dollars by businesses and households, either to catch better yuan levels or to stave off losses.

China’s yuan has strengthened 1.5% against the flagging dollar since April 2, when US President Donald Trump announced punishing trade tariffs on scores of countries, leading to market ructions that have eroded confidence in US economic policymaking and the dollar’s haven appeal.

In the same period, currencies such as the Thai baht, South Korea’s won and Taiwan dollar have risen between 6% and 14%.

The yuan has spent most of 2025 in a narrow range between 7.15 and 7.35 to the dollar, its weakest levels in 4-1/2-years in trade-weighted terms.

The export sector, comprising a fifth of economic growth, is grappling with higher US import tariffs of as much as 55% going by the latest trade framework agreed between the world’s two biggest economies in early June.

China was initially singled out with tariffs exceeding 100% and has until August 12 to reach an agreement with the White House to keep Trump from reinstating additional import curbs imposed during tit-for-tat tariff exchanges in April and May.

“Considering the external risks from US trade policies, China needs to maintain a very competitive currency with respect to other markets outside the US,” said Eugenia Victorino, head of Asia strategy at SEB.

PBOC SIGNALS

The PBOC did not respond to a Reuters request for comments.

Since May, it has managed its daily yuan “guidance” settings to indicate it doesn’t desire too much strength in the yuan.

It has also signalled willingness for mainland investors to shift some of their money from low-yielding onshore markets to stocks and bonds in Hong Kong, which some analysts suspect is to generate some selling pressure on the yuan.

Authorities approved a fresh USD 3.08 billion quota for domestic institutions (QDII) to invest in overseas assets in June. On Tuesday, the PBOC said the southbound leg of the Bond Connect scheme, which enables institutions on the mainland to access Hong Kong’s bond market, will be expanded to brokerages, insurers, mutual funds and wealth managers.

China’s central bank also surveyed some financial institutions last week asking them about their views on recent US dollar weakness, sources told Reuters on Monday.

“The PBOC has been prioritising currency stability for quite some time, so while most of the focus the past couple of years has been on preventing rapid depreciation, this also applies to manage the pace of appreciation as we’re now seeing,” said Lynn Song, chief economist for Greater China at ING.

“My forecast band for this year was set at 7 to 7.4, and I believe it is likely that this band will still hold through the year.”

Unsurprisingly, rampant dollar hoarding by Chinese businesses has continued, encouraged also by the high yields on US dollar assets.

Foreign exchange deposits grew USD 137.2 billion in the first five months of this year, or 19% year-on-year, to USD 990.1 billion at end-May, PBOC data showed. Reuters calculations showed the conversion ratio – a gauge that measures households’ and corporates’ willingness to sell dollars for yuan – has slipped.

Wary of missing out on potential gains from yuan depreciation, exporters have turned to currency swaps to temporarily obtain yuan.

Commercial banks facilitated USD 277.5 billion of currency swaps on behalf of their clients between January and May, a 10% increase over the same period last year, according to data from regulators.

(Reporting by Reuters Staff; Editing by Vidya Ranganathan and Kim Coghill)

US yields rise on tariff concerns before long-dated auctions

US Treasury yields rose on Tuesday as President Donald Trump announced more tariffs and before the Treasury will auction 10-year and 30-year debt in the coming days.

Trump on Monday told 14 nations, from powerhouse suppliers such as Japan and South Korea to minor trade players, that they will face sharply higher tariffs from a new deadline of August 1.

He also broadened his global trade war on Tuesday as he announced a 50% tariff on
imported copper
and said long-threatened levies on semiconductors and pharmaceuticals were coming soon.

Investors are concerned that higher tariffs will increase inflation and slow economic growth, though so far price pressures have remained relatively contained.

The US Congress also last week passed the Trump-backed “Big Beautiful Bill,” which will add trillions of debt over the coming decade and raises the debt ceiling by USD 5 trillion.

“There’s plenty of concern about what the one ‘Big Beautiful Bill’ means and if tariffs are going to produce inflation that we really haven’t seen yet,” said Zachary Griffiths, head of IG and macro strategy at CreditSights in Charlotte, North Carolina. “A lot is going to hinge on this CPI print.”

The US Labor Department is due to release the Consumer Price Index for June on July 15.

The Treasury saw soft demand for a USD 58 billion auction of three-year notes on Tuesday. The debt sold at a high yield of 3.891%, around half a basis points above where it traded before the sale. Demand was below average at 2.51 times the amount of debt on offer.

The Treasury will sell USD 39 billion in 10-year notes on Wednesday and USD 22 billion in 30-year bonds on Thursday.

Longer-dated yields have risen more than shorter-dated ones this week, which may help boost interest in the upcoming auctions.

“To the extent we’ve seen the curve steepen over the past couple of days, maybe that adds to the likelihood of a decent bid for tens and thirties,” Griffiths said.

Demand for longer-dated debt may also be supported after Treasury Secretary Scott Bessent last week said he does not plan to increase the auction sizes of the debt at current interest rates.

The yield on benchmark US 10-year notes was last up 2.2 basis points on the day at 4.417% and reached 4.435%, the highest level since June 20.

The 30-year bond yield rose 1.7 basis points to 4.947% and reached 4.974%, the highest level since June 9.

The interest rate sensitive 2-year note yield rose half a basis point to 3.909% and got as high as 3.92%, the highest level since June 23.

The yield curve between two-year and 10-year notes steepened by around two basis points to 51 basis points.

A global bond selloff including Japanese and German bonds helped to pull US yields higher on Tuesday.

Yields have also increased this week after a stronger-than-expected jobs report for June on Thursday led traders to pare bets on how many times the Federal Reserve is likely to cut rates this year.

The Treasury said on Tuesday that it will increase its issuance of 4-, 6- and 8-week Treasury bills as it rebuilds its cash balance after the increase in the debt ceiling.

(Reporting by Karen Brettell; Editing by Paul Simao and Nick Zieminski)

Yen struggles after Trump tariff letter; Aussie jumps after RBA hold

NEW YORK – The yen took a hit on Tuesday after US President Donald Trump reiterated his plan to impose 25% tariffs on goods from Japan and South Korea in the latest twist of his unpredictable trade war.

The Australian dollar charged higher after the country’s central bank defied market expectations and left its cash rate steady at 3.85%.

Trump on Monday began telling trade partners – from powerhouse suppliers such as Japan and South Korea to minor players – that sharply higher US tariffs will start August 1, but he later said he was open to extensions if countries made proposals.

The yen weakened on Tuesday, leaving the dollar up 0.38% at 146.625.

Prime Minister Shigeru Ishiba said on Tuesday he would continue negotiations with the US to seek a mutually beneficial trade deal.

“Market participants overwhelmingly expect the administration to keep kicking the can down the road,” said Karl Schamotta, chief market strategist at Corpay, in a research note.

“Although heightened uncertainty levels will unquestionably take a meaningful toll on business investment in the near term, Trump is seen raising effective tariff rates incrementally… while stopping short of inflicting a devastating supply shock on the American economy.”

The European Union will not receive a tariff letter and could secure exemptions from the US baseline rate of 10%, EU sources familiar with the matter told Reuters on Monday.

Reflecting the contrasting fortunes of the two trading partners, the euro hit a one-year high against the yen and was last up 0.58% at 171.980.

The euro also rose against the dollar, up 0.17% to USD 1.1729.

“There is still a lot of uncertainty as to where tariff rates will eventually settle and which countries will get what rates, so uncertainty about the global economy is still high and that will keep investors on edge for the time being,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

RBA STUNS MARKETS

The standout performer among the major currencies on Tuesday was the Aussie dollar, which rose more than 1% in response to the RBA’s surprise decision to leave rates unchanged. It was last up 0.6% at USD 0.653.

Markets had positioned for a cut, yet the central bank said the board “judged that it could wait for a little more information” to confirm that inflation was slowing.

Still, the board noted that the risks to inflation were more balanced and appeared to be waiting for a reading on second-quarter prices due at the end of July before deciding.

“The uncertainty around Trump’s tariffs means that it doesn’t embolden a decisive decision, whereas the need for more assurance over inflation means they probably want to wait out this meeting and get into August,” said Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho.

The New Zealand dollar was last down 0.03% at USD 0.6, while sterling fell 0.04% to USD 1.3597.

(Additional reporting by Yoruk Bahceli in London and Rae Wee in Singapore; Editing by Chizu Nomiyama, Rod Nickel, and Nick Zieminski)

Oil prices ease as traders assess US tariffs, OPEC+ output hike

Oil prices eased on Tuesday after rising almost 2% in the previous session, as investors assessed new developments on US tariffs and a higher-than-expected OPEC+ output hike for August.

Brent crude futures dropped 21 cents at USD 69.37 a barrel by 0041 GMT. US West Texas Intermediate crude fell 24 cents at USD 67.69 a barrel.

US President Donald Trump on Monday began telling trade partners, which included major suppliers South Korea and Japan as well as smaller US exporters like Serbia, Thailand, and Tunisia, that sharply higher US tariffs will start August 1, marking a new phase in the trade war he launched earlier this year.

Trump’s tariffs have prompted uncertainty across the market and concerns that they could have a negative effect on the global economy and, consequently, on oil demand.

However, there are some signs that current demand remains strong, particularly in the US, the world’s biggest oil consumer, which has supported prices. A record 72.2 million Americans were projected to travel more than 50 miles (80 km) for Fourth of July vacations, data from travel group AAA showed last week.

Investors were bullish heading into the holiday period, with data from the US Commodity Futures Trading Commission released on Monday showing money managers raised their net-long futures and options positions in crude oil contracts in the week up to July 1.

Regarding supplies, on Saturday the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, agreed to raise production by 548,000 barrels per day in August, exceeding the 411,000-bpd hikes they made for the prior three months.

The decision removes nearly all of the 2.2 million-bpd of voluntary cuts, and analysts at Goldman Sachs expect OPEC+ to announce a final 550,000-bpd increase for September at the next meeting on August 3.

However, the actual output increase has been smaller than the announced levels so far and most of the supply has been from Saudi Arabia, analysts said.

(Reporting by Stephanie Kelly; Editing by Christian Schmollinger)

Dollar rises after Trump announces Japan, South Korea tariffs

NEW YORK – The dollar rose sharply against other major currencies on Monday, after US President Donald Trump announced new tariffs set to go into effect August 1 for a spate of countries, including Japan and South Korea.

Trump posted letters to the leaders of several countries on his social media platform, saying that he would impose tariffs of 25% on Japan and South Korea. He also sent letters to the leaders of Malaysia, Kazakhstan, Myanmar, South Africa and Laos, all of which outlined tariffs close to the levels previously announced for each country in April.

The dollar’s rise was most pronounced against the yen, and was last up 1.09% at 146.130.

The dollar was up 0.38% to 0.798 against the Swiss franc on Monday.

“There were some country-specific things that were already putting some of these currencies on the back foot,” said Brad Bechtel, global head of FX at Jefferies. “But clearly, the news this morning out of the US with Trump and the tariffs is definitely hitting currencies other than the dollar, for a change.”

The euro slipped 0.57% to USD 1.172 having rallied over 13% so far this year.

Investors are concerned that Brussels might not be able to secure deals with Washington ahead of the deadline as progress on agreements with the European Union has been slow, despite multiple rounds of negotiations.

Most US trade partners face the prospect of steeper duties at the end of the 90-day moratorium on US President Donald Trump’s “Liberation Day” reciprocal tariffs on Wednesday.

Trump has also threatened an additional 10% tariff on nations aligning with what he deemed to be the “anti-American” policies of the BRICS emerging economies.

The dollar index, which measures the currency against six major counterparts, rose 0.517% to 97.467, reaching a one-week high.

The index extended gains from last week when data reflecting labour market resilience pushed back expectations for imminent monetary policy easing by the Federal Reserve.

Still, the index is close to a 3-1/2-year trough and has declined 10% so far this year as investors questioned the safe-haven status of the US currency and reassessed earlier expectations that the US could be spared in the event of a global economic slowdown.

Sterling weakened 0.26% to USD 1.362, but stayed near its strongest level since October 2021.

Currencies positively correlated to risk appetite, such as the Aussie dollar and the New Zealand dollar lost 0.79% and 0.74%, respectively, ahead of monetary policy decisions in both countries in the coming two days.

The Reserve Bank of Australia is widely expected to cut the cash rate by another quarter point on Tuesday, while New Zealand’s central bank is predicted to hold rates steady on Wednesday.

US policy uncertainty weighing on the dollar “may not be as potent as in early April, but we think this correlation still matters,” Paul Mackel, global head of FX research at HSBC, said.

(Reporting by Hannah Lang; additional reporting by Johann M Cherian and Kevin Buckland; Editing by Christian Schmollinger, Rachna Uppal, Gareth Jones, Barbara Lewis, and Cynthia Osterman)

Stocks sell off, dollar gains as Trump plans 25% tariffs on Japan, South Korea

NEW YORK – Major stock indexes declined while the dollar strengthened on Monday as US President Donald Trump unveiled sharply higher US tariffs on goods from Japan, South Korea, and other countries in the latest development in the US trade war.

Longer-dated US Treasury yields rose.

Trump on Monday began telling trade partners, including Japan and South Kore,a that the higher US tariffs will start August 1.

Trump in April capped all of the so-called reciprocal tariffs with trading partners at 10% until July 9 to allow for negotiations. Only two agreements, with Britain and Vietnam, have been reached.

“Trade, inflation, and earnings are going to be the next three catalysts that will drive the market higher or lower, depending on how they unfold,” said Adam Sarhan, chief executive of 50 Park Investments in New York.

“But markets like certainty, and today’s news increases the level of uncertainty, hence the selloff,” he said.

Tariffs are expected to increase prices and to slow down growth, though uncertainty over the ultimate policies may be a bigger drag as it leads businesses to postpone decisions.

S&P 500 companies next week are expected to begin reporting results on the second quarter.

The Dow Jones Industrial Average fell 422.17 points, or 0.94%, to 44,406.36, the S&P 500 fell 49.37 points, or 0.79%, to 6,229.98, and the Nasdaq Composite fell 188.59 points, or 0.91%, to 20,412.52.

US-listed shares of Japanese automotive companies fell, with Toyota Motor down 4% and Honda Motor off by 3.9%.

Also, electric vehicle maker Tesla shares fell 6.8% after CEO Elon Musk announced the formation of a US political party named the “American Party.”

MSCI’s gauge of stocks across the globe fell 5.80 points, or 0.63%, to 919.93. The pan-European STOXX 600 index closed up 0.44%.

The yield on benchmark US 10-year notes was last up 5.7 basis points on the day at 4.397%. The interest rate-sensitive two-year yield rose 1.9 basis points to 3.901%.

The dollar’s rise was most notable against the yen. It was up 1.09% at 146.130. The euro slipped 0.57% to USD 1.172, having rallied over 13% so far this year.

The dollar index, which measures the currency against six major counterparts, rose 0.517% to 97.467, reaching a one-week high.

Minutes of the last Federal Reserve meeting are also due this week. Investors are weighing how many times the Fed is likely to cut interest rates this year after jobs data for June on Thursday showed that employers added more jobs than economists had forecast.

Oil prices rose as signs of strong demand offset the impact of a higher-than-expected OPEC+ output hike for August and concerns about possible tariff impacts.

Brent crude futures rose USD 1.28, or 1.9%, to settle at USD 69.58. US West Texas Intermediate crude gained 93 cents or 1.4%, to settle at USD 67.93.

(Reporting by Caroline Valetkevitch in New York; Additional reporting by Lawrence White in London and Wayne Cole in Sydney; Editing by Cynthia Osterman and Stephen Coates)

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