Stocks and bonds resumed a sell-off and the dollar extended losses after its biggest plunge in three years as a worsening global trade war eroded an already fragile appetite for risk.
A gauge of Asian stocks is on track for its third consecutive week of decline as market relief turned to angst after the White House clarified US tariffs on China rose to 145 per cent. US Treasuries resumed a sell-off from earlier in the week. Equity-index futures for the S&P 500 retreated. In a sign investors are seeking havens and non-US alternatives, the euro soared as much as 1.6%, the yen strengthened and gold set a new high.
Just a day after financial markets cheered President Donald Trump’s decision to delay some of his sweeping tariffs, the sell-off suggested scepticism about the planned talks with US trade partners and fear of escalating tensions with China. The much-vaunted America-first trade — buying up assets that win when the US outperforms the rest of the world — is reversing on concern that the steepest increase in levies in a century will push the world’s biggest economy into a recession.
“The repeated changes in President Trump’s tariff stance has undermined investor confidence in the US government and economy,” said Carol Kong, a strategist at Commonwealth Bank of Australia. “The sell-offs in US equities, bonds and the dollar suggest market participants are reallocating their portfolios away from US dollar assets.”
The currency weakness extended into Asian trading Friday, after the Bloomberg Dollar Spot Index closed down 1.5 per cent at the end of trading in New York Thursday. The options premium paid to hedge a dollar decline versus a basket of peers over the next week reached the highest since March of 2020, relative to positioning for gains.
Even emerging market currencies such as the Korean won and the Thai baht rallied against the dollar. A gauge of EM currencies rose about 0.6 per cent, on pace for its best day since August.
Gains for the yen pushed the Japanese currency to around 143 per dollar on Friday, a level not seen since October. The Swiss franc touched the highest level in a decade.
“One may bemoan all the uncertainty that the past week brought, which is bound to linger and amount to a significant drag on investment, along with trade, for a long time to come,” wrote HSBC Holdings Plc economists Frederic Neumann and Justin Feng.
Shares in China and Hong Kong slipped on Friday after they gained in the prior session on expectations the government will come out with more economic stimulus. The country’s top leaders were due to meet in Beijing Thursday to discuss the measures.
News of the higher levy on Chinese goods appeared to outweigh signals from Trump that the US is close to a first deal on tariffs, without naming the country.
“The Trump administration’s stance has evolved from an all-out trade war against everyone, to a concentrated trade war against China,” said Nicolas Oudin of Gavekal Research. “Most investors believe that China shot itself in the foot by retaliating. The view from Beijing is different. Many in China read the ‘Trump fold’ as a sign of US weakness, and therefore as a validation of China’s decision to escalate.”
China is likely to defy expectations from some on Wall Street of big yuan devaluations against the dollar, opting instead to only moderately weaken the managed currency, according to Allan von Mehren, the chief analyst at Danske Bank.
The nation’s daily reference rate for the yuan edged slightly up on Friday, after weakening for six straight sessions, amid the dollar’s losses.
As Trump unleashes an all-out assault on global trade, the status of US Treasury bonds as the world’s safe haven is increasingly coming into question. Yields, especially on longer-term debt, have surged in recent days while the dollar has plunged.
On Friday, the 10-year Treasury yield rose as much as six basis points, adding to the nine on Thursday as investors continued to sell down holdings of the debt. Australian and New Zealand yields also rose Friday.
The worsening tariffs spat is already affecting corporations. Audi has suspended deliveries to the US and the bigger-than-expected import tax has also prompted Japan’s Nintendo Co. to delay pre-orders for its long-awaited Switch 2 gaming console. From Ray-Bans to wigs, US buyers may see unexpected price rises.
Retailer Five Below Inc. has asked vendors to turn away products waiting for shipment in China before they set off for the US.
In commodities, oil was slightly lower Friday, while gold extended gains. Bitcoin edged lower early Friday to around $79,600.
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.5% as of 11:49 a.m. Tokyo time
- Japan’s Topix fell 4.2%
- Australia’s S&P/ASX 200 fell 1.3%
- Hong Kong’s Hang Seng fell 0.3%
- The Shanghai Composite fell 0.2%
- Euro Stoxx 50 futures rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index fell 0.4%
- The euro rose 0.9% to $1.1298
- The Japanese yen rose 0.5% to 143.69 per dollar
- The offshore yuan fell 0.2% to 7.3234 per dollar
Cryptocurrencies
- Bitcoin rose 0.6% to $80,354.76
- Ether rose 0.5% to $1,537.18
Bonds
- The yield on 10-year Treasuries advanced three basis points to 4.45%
- Australia’s 10-year yield advanced eight basis points to 4.41%
Commodities
- West Texas Intermediate crude fell 0.7% to $59.65 a barrel
- Spot gold rose 1.3% to $3,218.93 an ounce
This story was produced with the assistance of Bloomberg Automation.
More stories like this are available on bloomberg.com
Published on April 11, 2025
