Asian stock markets began the trading week on a weaker note Monday, with most regional indices slipping amid confusion over US tariff policy and a slide in oil prices after OPEC+ opened its supply spigots more than expected.
The lack of clarity on trade deadlines and tariff rates from Washington has injected a fresh dose of uncertainty into markets, leading to a cautious start across the board, including a muted opening for Indian benchmarks like the Sensex.
The United States appears to be close to finalizing several trade agreements in the coming days and will notify other countries of their higher tariff rates by July 9, according to President Donald Trump’s statements on Sunday.
The higher rates, he indicated, would then take effect on August 1.
“President Trump’s going to be sending letters to some of our trading partners saying that if you don’t move things along, then on August 1 you will boomerang back to your April 2 tariff level,” US Treasury Secretary Scott Bessent told CNN.
President Trump had originally announced a 10% base tariff rate on most countries in April, with higher “reciprocal” rates ranging up to 50%, setting an original deadline of this Wednesday.
However, with very few actual trade deals finalized, analysts had always suspected the date would be pushed out.
The situation is further muddled by President Trump’s additional comments that levies could range in value from “maybe 60% or 70%,” and his threat of an extra 10% on countries aligning themselves with the “Anti-American policies” of the BRICS group (Brazil, Russia, India, and China).
It remains unclear if the new deadline applies to all US trading partners or just some, leaving investors to grapple with the uncertainty.
“This renewed escalation in trade tensions comes at a time when major trade partners, including the EU, India and Japan, are believed to be at crucial stages of bilateral negotiations,” analysts at ANZ said in a note.
If reciprocal tariffs are implemented in their original form or even expanded, we believe it will intensify downside risks to US growth and increase upside risks to inflation.
The initial market reaction to this renewed uncertainty was cautious.
Japan’s Nikkei lost 0.5%, while South Korean stocks went flat. MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.6%, as Chinese blue chips dropped 0.5%.
S&P 500 futures and Nasdaq futures both eased by about 0.3%. In Europe, EUROSTOXX 50 futures eased 0.1%, while FTSE futures fell 0.2%, and DAX futures held steady.
Markets start on a muted note amid local and global cues
Indian equity indices opened Monday’s trading session on a subdued note, with the market digesting reports about a potential US-India trade deal alongside the fallout from the recent SEBI report on Jane Street allegedly manipulating Indian equity markets.
The NSE Nifty 50 opened near the 25,450 mark, while the BSE Sensex was muted at around 83,400.
In line with the headline indices, Bank Nifty was flat at 57,013, and the small and midcap indices also traded cautiously, with the Nifty Midcap 100 opening subdued at 59,680.
Among individual stocks on the Nifty, Trent, Asian Paints, and HDFC Life were trading in the green with modest gains of under 1%.
Following their Q1 updates, some FMCG stocks, including Dabur and Godrej Consumer, saw early gains. The broader markets, however, are moving at a similar cautious pace with diminished intensity.
This comes as India, like other nations, prepares for the shifting US tariff deadlines.
Currencies and bonds react to uncertainty
In a typical flight to safety, government bonds were better bid, with 10-year Treasury yields down almost 2 basis points at 4.326%. Major currencies were mixed.
The US dollar index nudged up to 97.071. The euro held steady at $1.1771, just off last week’s peak of $1.1830, while the dollar was a fraction firmer against the yen at 144.76.
The dollar has been somewhat undermined by investor concerns about President Trump’s often chaotic tariff policy and its potential impact on economic growth and inflation.
These same worries have kept the Federal Reserve from cutting interest rates, and the minutes of its last meeting, due for release soon, should offer more insight into when a majority of members might consider resuming monetary easing.
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