Retailers set to give tariff view as US stock market roars back

NEW YORK – A batch of US retail earnings reports in the coming week is set to shed more light on the economic fallout from the shifting tariff backdrop and test the stock market’s sharp rebound.

Results from retailers including Target, Home Depot and Lowe’s arrive as investors have become less worried that US President Donald Trump’s tariffs will send the economy into a recession, particularly following the recent US-China trade truce between the world’s two largest economies.

But a warning from Walmart on Thursday that the world’s largest retailer will have to start raising prices due to the high tariffs is putting other retailers in the spotlight, as investors watch how they are reacting to a trade backdrop that remains in flux.

“Retailers are going to be incredibly important, especially after what happened with Walmart’s announcement,” said Matthew Maley, chief market strategist at Miller Tabak.

Maley said it was notable that Walmart’s warning followed news of the US-China truce, in which both sides are reducing their extra tariffs that had exceeded 100% for 90 days.

That Walmart is “still warning about the tariffs that will be put in place, even though they won’t be some of the most severe ones that everybody was worried about, obviously that raises some concerns,” Maley said.

The potential for tariffs to raise prices that could slow consumer spending or drive up inflation has worried investors, particularly since Trump’s April 2 “Liberation Day” announcement of sweeping levies on imports.

The retailers’ quarterly reports also will offer the latest glimpse into the health of consumer spending, which accounts for more than two-thirds of US economic activity.

Data on Thursday showed US retail sales growth slowed sharply in April as the boost from front-loading purchases ahead of tariffs faded, while consumer sentiment and other surveys have been weak.

“Sentiment is pretty sour,” said Jack Ablin, founding partner and chief investment officer at Cresset Capital. “But what we have to do is find out if households are really following through and pulling back on spending.”

Results in the coming week also include apparel maker Ralph Lauren and off-price retailer TJX Cos, with the various reports offering insight into a number of consumer segments, investors said.

One topic of interest is whether shoppers will “trade down” to less expensive items “because people are nervous about rising prices,” said JJ Kinahan, CEO of IG North America and president of online broker Tastytrade.

Stocks have staged a massive recovery since Trump’s April 2 announcement set off extreme volatility and sent stocks plunging. The benchmark S&P 500 index is up over 18% from its April closing low and has erased its losses for the year.

The stock market “just continues to bounce back,” Kinahan said.

(Reporting by Lewis Krauskopf; Editing by Richard Chang)

US inflation progress stokes real yield problem: McGeever

ORLANDO, Florida – Few would find fault with the steady, gradual decline in US inflation, but it has recently come with an unwelcome side effect: rising ‘real’ borrowing costs.

With the Federal Reserve’s official policy rate on hold and the benchmark 10-year Treasury yield edging higher, inflation-adjusted interest rates – so-called real rates – are rising, effectively tightening monetary policy and financial conditions.

The real yield on the 10-year Treasury note is now approaching 2.20%, the highest in a decade, based on the April headline annual CPI inflation rate of 2.3%. And the real fed funds rate has risen from a low of 1.50% in January to eclipse 2.00%, the highest in more than six months.

While real borrowing costs are not at levels that will trigger alarm bells with Fed officials, CEOs or CIOs, the direction of travel is pretty clear, and is one more factor that could weigh on the activity of consumers, businesses, and investors in an environment already shrouded in a thick fog of uncertainty. Additionally, for policymakers, it shines a light on the constant struggle to determine the optimal interest rate at any given time.

In Fed Chair Jerome Powell’s press conference earlier this month after the central bank left its fed funds target range on hold at 4.25-4.50%, he said no fewer than eight times that rates are “in a good place”. Current policy is “somewhat” and “modestly or moderately” restrictive, he added.

The higher real rates grind, however, the tighter policy gets, unless the Fed resumes its easing cycle, which has been on pause following cuts of 100 basis points between last August and December. The tariff-fueled uncertainty and volatility of recent months has helped to extend that pause and, thus, enabled real rates to rise.

R-STAR, MAN

Real borrowing costs can send vastly different signals from their nominal equivalents. For example, Japan’s official policy rate and long-dated bond yields are the highest in years, but the real policy rate is deeply negative and by far the lowest among the G4 central banks.

In the US, the signaling behind today’s rate moves is far from clear. If real yields are rising because investors are demanding a risk premium to hold dollars and Treasuries, then it’s a cause for concern. If the upward shift reflects strong growth expectations, then that’s much more positive.

But, regardless, one thing is evident. The higher US real rates grind, the further away they move from ‘R-Star’, the amorphous real rate of interest that neither stimulates nor crimps economic activity when the economy is at full employment.

Two closely watched R-Star models partly constructed by current New York Fed President John Williams suggest the optimum real interest rate at the end of December was 0.8% or 1.3%, both the lowest in years. These figures will be updated for the January-March quarter at the end of this month. Fed rate-setters’ median projection for the natural real interest rate is around 1.0%, and this view will be updated next month.

These projections assume inflation at the Fed’s 2% target, which it hasn’t been for years. The R-Star concept has come under heavy criticism since the pandemic. Williams defended it in July last year, saying it is a fundamental part of all macroeconomic models and frameworks. “Pretending it doesn’t exist or wishing it away does not change that.”

But he also cautioned that R-Star should not be “overly” relied upon when setting appropriate monetary policy “at a given point in time” given the uncertainty surrounding it.

So as real rates move further away from this theoretical sweet spot, what, if anything, is the real-world impact?

Right now, financial conditions are loosening as markets calm after the market turmoil wrought by the ‘Liberation Day’ tariff tantrum last month. But if you exclude that uniquely volatile episode, conditions have been steadily tightening since September last year, Goldman Sachs’s US financial conditions index shows.

Further upside for real yields from here may be limited if inflation ticks higher in the coming months as Trump’s tariffs kick in. But worries over US debt and deficits are beginning to weigh on the long end of the bond market again.

As investors continue to monitor countless economic variables to determine where the US economy is heading, elevated real yields are one they should watch closely.

(The opinions expressed here are those of the author, a columnist for Reuters)

(By Jamie McGeever)

US yields drop as signs of economic deceleration mount

NEW YORK – US Treasury yields fell sharply on Thursday after data showed deceleration in the world’s largest economy in April, including drops in producer prices, manufacturing output, and a slowdown in retail sales.

The reports suggested the Federal Reserve was on track to cut interest rates at least twice this year.

In afternoon trading, the yield on the benchmark US 10-year Treasury note fell 7.9 basis points (bps) to 4.449%, on track for its largest daily drop since April 24.

The yield on the US 30-year Treasury bond also dipped, down 5.2 bps at 4.915%, after earlier hitting 5% for the first time since April 9.

On the shorter end of the curve, the two-year yield, which typically moves in step with interest rate expectations, was down 9.2 bps at 3.961%, its biggest one-day decline in roughly a month.

Yields retreated after the release of data that showed US producer prices unexpectedly fell in April, with the index for final demand dropping 0.5% after an upwardly revised unchanged reading in March. Economists polled by Reuters had forecast the PPI would rise 0.2%.

“Clearly, companies absorbed a big chunk of tariff increases,” Chris Low, chief economist at FHN Financial, said in emailed comments. “Whether they will continue to do so, or will try to pass them on as price increases, remains to be seen.”

At the same time, US factory output slid more than expected, down 0.4% last month after an upwardly revised 0.4% gain in March. Economists polled by Reuters had forecast production would slip 0.2% after a previously reported 0.3% rise.

US retail sales, on the other hand, were mixed, with the headline figure edging up 0.1% after an upwardly revised 1.7% jump in March. But core retail sales, which exclude automobiles, gasoline, building materials and food services, fell 0.2% in April after an upwardly revised 0.5% gain in March. This measure corresponds most closely with the consumer spending component of gross domestic product.

“The fall in core retail sales was surprising and is helping push yields down,” said Vail Hartman, a rates strategist at BMO Capital Markets in New York. “That’s a discouraging start to the second quarter.”

Walmart WMT.N, the world’s largest retailer, will have to start raising prices later this month due to the high cost of tariffs, executives said on Thursday, as the company declined to provide forecasts for the second quarter. That should further dampen consumer spending and weigh on retail sales even more.

“We are also seeing changes in jobs growth,” added Stan Shipley, managing director at ISI. Thursday’s unemployment claims report showed requests were stable, but also that job opportunities are becoming more scarce for those out of work as economic uncertainty from tariffs discourages businesses from hiring.

The overall data on Thursday reinforced bets on two interest rate cuts by the Fed, with a roughly 75% chance that the easing would begin in September, according to CME Group’s FedWatch tool.

Meanwhile, a closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 48 bps, little changed from Wednesday’s level.

The overall trend remained tilted toward a steeper curve, with yields on the front end falling faster than those on the long end as the Fed carries on with its easing cycle.

(Reporting by Tatiana Bautzer and Gertrude Chavez-Dreyfuss; Editing by Paul Simao and Diane Craft)

Gold prices rise over 1% on softer dollar and weak economic data

Gold prices rose more than 1% on Thursday, aided by a softer dollar and weak US economic data, while Russian President Vladimir Putin’s failure to attend peace talks drove some safe-haven buying.

Spot gold rose 1.3% to USD 3,218.89 an ounce by 1351 ET (17:51 GMT) after hitting a more than one-month low earlier in the session.

US gold futures settled 1.2% higher at USD 3,226.6.

The dollar index slipped 0.1%, making dollar-priced gold cheaper for overseas currency holders.

Data showed US producer prices unexpectedly fell in April, while retail sales growth slowed. Earlier this week, a report showed consumer prices rose less than expected in April.

Markets are pricing the Federal Reserve to cut rates by September. Lower interest rates help increase bullion’s attractiveness as it is a non-yielding asset.

Thursday’s data creates more room for the Fed to cut rates, with a more dovish expectation building in the market, said Peter Grant, vice president and senior metals strategist at Zaner Metals.

“Putin not attending the peace talks in Turkey dims expectations of progress towards a peace deal, which I think is helping to underpin gold prices today,” Grant added.

Putin sent a second-tier team of negotiators to hold peace talks with Ukraine in Turkey, spurning Kyiv’s challenge to go there in person to meet President Volodymyr Zelenskiy.

Analysts say investors remain cautious as global trade tensions continue, although the US and China have agreed to a temporary tariff deal for 90 days.

Spot silver rose 0.8% to USD 32.47 an ounce, platinum added 1.3% to USD 989.01, and palladium was up 1.2% to USD 962.33.

The palladium market, which was in a deficit in 2012-2024, will move into balance this year, with demand falling due to lower production of gasoline vehicles and increased recycling in China, Johnson Matthey said.

(Reporting by Sarah Qureshi and Ashitha Shivaprasad in Bengaluru; editing by Barbara Lewis and Vijay Kishore)

Oil prices settled down 2% on expectations for US-Iran nuclear deal

LONDON – Oil prices settled lower on Thursday on expectations for a US-Iran nuclear deal that could result in sanctions being eased and more barrels released onto the global market.

Brent crude futures settled down USD 1.56, or 2.36%, to USD 64.53 a barrel. US West Texas Intermediate crude futures settled down USD 1.53, or 2.42%, to USD 61.62.

US President Donald Trump said on Thursday that the US was getting close to securing a nuclear deal with Iran, and Tehran had “sort of” agreed to the terms.

An Iranian official told NBC News in an interview published on Wednesday that Iran was willing to agree to a deal with the US in exchange for lifting economic sanctions.

“(Any) immediate sanctions relief stemming from a nuclear agreement could unlock an additional 0.8 million barrels per day of Iranian crude for the global market – an undeniably bearish development for prices,” SEB analyst Ole Hvalbye said.

Washington issued sanctions on Wednesday to target Iranian efforts to domestically manufacture components for ballistic missiles, the US Treasury Department said, following Tuesday’s sanctions on some 20 companies in a network that it said has long sent Iranian oil to China.

The sanctions followed a fourth round of US-Iran talks in Oman aimed at addressing disputes over Iran’s nuclear program.

“We are swinging between President Trump zeroing out Iran to bringing them into the community of nations, so the threat to supply is in both directions, with either some Iranian barrels continually snuck onto the market or we get the full benefit of Iranian production, that is what is swinging the price,” said John Kilduff, partner at Again Capital in New York.

Elsewhere, Russia’s Vladimir Putin spurned a challenge to meet face-to-face with Ukrainian President Volodymyr Zelenskiy in Turkey on Thursday, dealing a blow to prospects for a peace breakthrough.

Zelenskiy said Putin’s decision to send what he called a “decorative” lineup showed the Russian leader was not serious about ending the war.

“I think that is supportive because part of the bear case for prices is that if this Ukraine-Russia situation resolves itself then we can get that Russian supply onto the global market,” Kilduff said.

Meanwhile, the International Energy Agency lifted its oil demand growth forecast in 2025 to 740,000 barrels per day, up 20,000 bpd from the previous report, citing higher economic growth forecasts and lower oil prices supporting consumption.

The IEA said economic headwinds and record sales of electric vehicles are expected to reduce demand growth to 650,000 bpd for the remainder of the year, from growth of nearly 1 million bpd in the first quarter.

The Organization of the Petroleum Exporting Countries and allied producers, known as OPEC+, has been increasing supply, although OPEC on Wednesday trimmed its forecast for growth in oil supply from the US and other producers outside the wider OPEC+ group this year.

Weighing on prices, data from the US Energy Information Administration on Wednesday showed crude stockpiles rose by 3.5 million barrels to 441.8 million barrels last week, compared with analysts’ expectations in a Reuters poll for a 1.1 million-barrel draw.

Black Sea CPC Blend crude oil exports are pencilled in at 1.6 million to 1.7 million bpd in June, several trading sources with knowledge of the month’s loadings told Reuters.

At that level, loadings will be higher than the approximately 1.5 million bpd scheduled for export in May.

(Additional reporting by Yuka Obayashi in Tokyo, Emily Chow in Singapore, Seher Dareen, and Ahmad Ghaddar in London. Editing by Barbara Lewis, Kirsten Donovan, and Rod Nickel)

Dollar rebounds to edge higher, gains in Korea’s won ease

NEW YORK, May 14 (Reuters) – The US dollar edged higher on Wednesday, rebounding from earlier declines as investors await fresh signals that global trade battles will continue to ease.

The dollar index began the week with a jump of more than 1% on Monday and hit a one-month high as the United States and China reached a deal to temporarily cut reciprocal tariffs and tamped down concerns that a trade war between the world’s two biggest economies could lead to a global recession.

But the greenback fell on Tuesday after a gauge of consumer prices was below economists’ expectations as declining food costs partially offset rising rents.

“Obviously, everything’s still pretty focused on trade these days, that’s still kind of a big catalyst moving things around,” said Brad Bechtel, global head of FX at Jefferies in New York.

“There’s a lot of volatility in the Asian currency space still, but the dollar should still be in a counter-trend bounce and then will ultimately start to turn lower again, potentially on some sort of backdoor or behind-closed-doors arrangement.”

The dollar index, which measures the greenback against a basket of currencies, rose 0.06% to 101.04, with the euro down 0.06% at USD 1.1177.

Investors were also digesting news South Korea’s Deputy Finance Minister Choi Ji-young met with Robert Kaproth of the US Treasury on May 5 to discuss forex markets, which helped send the dollar to its lowest in a week against Korea’s won.

But the moves in Asian currencies eased somewhat after Bloomberg reported the US is not negotiating for a weaker dollar as part of tariff talks, citing a person familiar with the matter.

The won strengthened 0.84% against the dollar to 1,402.66 per dollar after gaining as much as 2.1%. Against the Japanese yen, the dollar weakened 0.52% to 146.71 after falling as much as 1.2% on the session.

Goldman Sachs analysts said in a note to clients that while details of the meeting are scarce and talks may be part of an ongoing dialogue, “it puts renewed focus on the scope for undervalued trade surplus currencies to appreciate in a weaker dollar environment.”

In light of the easing trade tensions, markets have dialed back expectations for rate cuts from the US Federal Reserve this year, pricing in a 74% chance for the first cut of at least 25 basis points (bps) at the central bank’s September meeting, according to LSEG data, compared with the prior view for a cut in July.

Several major brokerages, including Goldman Sachs, JPMorgan and Barclays, have recently scaled back their US recession forecasts and their view of Fed policy easing.

Chicago Fed President Austan Goolsbee said data showing temperate consumer inflation in April does not necessarily reflect the impact of rising US import tariffs, and the Fed still needs more data to determine the direction of prices and the economy.

Fed Vice Chair Philip Jefferson noted a similar sentiment, saying the recent inflation data indicated good progress towards the central bank’s 2% goal, but the outlook is now uncertain due to the possibility that new import taxes will drive prices higher.

Sterling weakened 0.32% to USD 1.3261. Bank of England interest rate-setter Catherine Mann said she voted to keep borrowing costs on hold last week – having sought a big 50-basis point cut in February – because Britain’s labor market had been more resilient than she expected.

(Reporting by Chuck Mikolajczak, additional reporting by Kevin Buckland and Linda Pasquini; Editing by Kirsten Donovan and Diane Craft)

US oil prices drop more than USD 1 on oversupply fear

TOKYO – US crude futures declined more than USD 1 in early trade on Thursday after an unexpected build in US crude oil inventories last week raised investor concerns about oversupply.

US West Texas Intermediate (WTI) crude futures slid USD 1.21, or 1.9%, to USD 61.94 by 2309 GMT. The benchmark slipped 0.8% on Wednesday.

Data from the Energy Information Administration showed

crude stockpiles rose by 3.5 million barrels to 441.8 million barrels in the week ended May 9, compared with analysts’ expectations in a Reuters poll for a 1.1 million-barrel draw.

API industry data also showed a large build of 4.3 million barrels in crude stocks last week, market sources said on Tuesday.

The Organization of the Petroleum Exporting Countries and allied producers, known as OPEC+, has been increasing supply, although OPEC on Wednesday trimmed its forecast for growth in oil supply from the United States and other producers outside the wider OPEC+ group this year.

(Reporting by Yuka Obayashi; Editing by Christopher Cushing)

US Treasury prices dip on budget bill worries

NEW YORK – US Treasury prices fell on Wednesday, pushing yields to multi-week highs, as investors grew concerned about growing disagreements on the Trump administration’s tax cut and budget legislation currently in Congress.

Benchmark US 10-year Treasury note yields hit a six-week high, punching through a key 4.5% support level. It was last up 3.7 basis points (bps) at 4.536%.

On the front end of the curve, the two-year yield, which typically moves in step with interest rate expectations, rose 4.2 bps to 4.059%, after earlier touching its highest since late March.

Republicans in the US Congress on Wednesday advanced elements of President Donald Trump’s sweeping budget package after a debate that lasted through the night, as a key committee voted along party lines to approve tax cuts that would add trillions of dollars to the US debt.

The House of Representatives Ways and Means Committee approved the first version of the tax cut bill, but a clearer picture of the size of future budget deficits depends on discussions of spending and potentially steep cuts to the Medicaid health program.

“I’m optimistic that Congress can approve some spending cuts, a lot of Republicans are keen to reduce the size of the state,” said Kim Rupert, managing director, global fixed income analysis, at Action Economics in San Francisco.

If the budget bill shows some control over the debt, the fears may be overblown and yields would not have to go higher, Rupert added.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, steepened to 48.1 bps, compared with 46.3 late on Tuesday. The curve has steepened for a second straight day.

Apart from worries about the budget bill, some analysts said higher Treasury yields could also be a reflection of diminishing fears of recession in the aftermath of the
90-day pause
in high tariffs between the US and China on Monday.

That should affirm expectations the Federal Reserve will take its time cutting interest rates in this current easing cycle.

Since the US-China tariff reprieve, markets on US rate futures have been betting that the Fed will cut twice this year, according to LSEG calculations, with the first easing likely happening in September with a roughly 70% probability.

Market participants will now look to Thursday’s new releases of retail sales and producer price index (PPI), which will show how Trump’s tariff policy affected inflation and consumption.

“Investors are looking for signs in the upcoming data releases of further inflationary pressures coming from tariffs”, said Tom di Galoma, managing director of rates and trading at Mischler Financial Group in Park City, Utah.

Some Treasury investors, meanwhile, have been diversifying fixed-income holdings out of the United States into Europe, with more supply coming this week from Germany and France, he added.

On Wednesday, Fed Vice Chair Philip Jefferson stressed the uncertainty surrounding the future path of inflation, including how persistent upward pressure from tariffs will be on prices.

“While trade policy has received the bulk of recent attention, I remain focused on the aggregate effect from the totality of different government policy changes, including trade, immigration, regulatory, and fiscal policies”, Jefferson said.

Walmart WMT.N earnings expected for Thursday may be important even for Treasury markets, Rupert of Action Economics noted, as the company’s numbers and comments may show how US consumers are reacting to tariffs and the extent to which companies are passing through higher costs.

(Reporting by Tatiana Bautzer; Editing by Rod Nickel, Gertrude Chavez-Dreyfuss and Diane Craft)

US yields rise as tariff outlook outweighs tame inflation

NEW YORK – US Treasury yields rose on Tuesday as lower-than-expected April inflation data overshadowed expectations that tariffs will fuel higher prices in the coming months, reinforcing bets that the Federal Reserve will take its time resuming its easing cycle.

The benchmark 10-year yield, which initially fell after the Labor Department released its April Consumer Price Index, was up 2.2 basis points (bps) at 4.479% in late afternoon trading. The two-year yield, which typically tracks the interest rate outlook, was little changed at 4.006%.

Although the headline numbers showed limited immediate impact from the Trump administration’s sharp tariff rises announced last month, prices of certain goods such as furniture and audio and video products rose due to the import levies, data showed.

The consumer price index increased 0.2% last month after dipping 0.1% in March, the first decline since May 2020. Economists polled by Reuters had forecast the CPI would rise 0.3%. In the 12 months through April, the CPI climbed 2.3% after rising 2.4% in the 12 months through March.

Core CPI inflation increased 2.8% on a year-on-year basis in April after rising 2.8% in March.

Analysts still expect inflation to pick up in the coming months. “Some of the positive aspects that contributed to a lower April CPI do not seem sustainable, such as the drop in used vehicle prices,” said Andy Schneider, senior US economist at BNP Paribas. In April, wholesale used vehicle prices rose, but prices for final buyers fell.

Inflationary pressure will persist even as the US-China deal made over the weekend showed both countries want to avoid a trade war. “Tariffs are still going to be significantly higher than they were in January,” Schneider added.

Markets estimate the Federal Reserve will not cut interest rates until later in the year, potentially twice in 2025. The first 25 basis points cut is expected at its September meeting, according to CME’s FedWatch tool. Schneider believes the Fed will not be able to cut rates this year.

“The report basically indicates that the Fed needs to be very cautious and that the stand that they have taken is probably the right course for now,” said Brian Jacobsen, chief economist at Annex Wealth Management.

As trade war fears recede, investors are expected to focus on budget and tax cut legislation discussions in Congress. Public debate began on Tuesday in the US House of Representatives. Congress’ bipartisan Joint Tax Committee estimates the tax cuts would cost USD 3.72 trillion.

“The CPI was softer than expected, which is good news, but markets are still cautious and looking for clarity on the longer-term policy path,” said Subadra Rajappa, head of US rates strategy at Societe Generale. Stocks got more of a boost from the inflation report than the bond market, she noted.

A closely watched part of the US Treasury yield curve measuring the gap between two- and 10-year notes, seen as an indicator of economic expectations, steepened 46.9 bps, suggesting that the Fed is on track to cut interest rates this year.

US yield curves typically steepen in an easing cycle, with the front end, such as the two-year tied to Fed rate cuts.

The breakeven rate on five-year US Treasury Inflation-Protected Securities (TIPS) was last at 2.395% after closing at 2.35% on May 12.

The US dollar 5 years forward inflation-linked swap, seen by some as a better gauge of inflation expectations due to possible distortions caused by the Fed’s quantitative easing, was last at 2.477%.

(Reporting by Tatiana Bautzer; Additional reporting by Chuck Mikolajczak; Editing by Andrew Cawthorne, Nick Zieminski, Susan Fenton, and Richard Chang)

Foreign investors return to Asian equities in May, reversing prolonged outflows

Asian equities are attracting foreign investments so far in May, marking a sharp reversal from outflows in the first four months of the year, as optimism over progress in trade talks has eased fears of US tariffs fuelling a global economic slowdown.

Foreign investors have purchased approximately USD 6.22 billion worth of equities across India, Taiwan, South Korea, Thailand, Indonesia, Vietnam, and the Philippines so far this month through May 12, according to LSEG data.

Leading the rebound, Taiwan has attracted a net USD 4.43 billion in foreign inflows, ending a four-month streak of outflows, while Indian equities have also seen a substantial USD 1.68 billion in foreign investment.

Regional stock markets suffered around USD 54.33 billion in foreign outflows during the first four months of the year, the largest exodus for the period since at least 2010.

After a turbulent start to the year due to concern about US President Donald Trump’s trade policies, Asian equities have staged a strong recovery. The MSCI Asia-Pacific Index has surged 18% since April 7, driven by a 90-day halt on higher US tariffs and progress in trade negotiations.

The US and China agreed to temporarily reduce steep reciprocal tariffs and cooperate to prevent further disruption to the global economy, with the US lowering levies on Chinese imports to 30% from 145% and China cutting duties to 10% from 125% for 90 days.

However, some analysts caution that uncertainty persists, as trade negotiations are expected to be prolonged and it remains too early to determine whether the tariff reductions will be permanent.

“News flow around trade deals has increased, stress measures have moderated from recent extremes, the dollar has weakened, and portfolio flows show tentative signs of re-risking,” Goldman Sachs said in a note.

But it noted that the combination of subdued company earnings growth and complacent valuations indicates a potential for near-term market pullbacks.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Emelia Sithole-Matarise)

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