Asian markets kicked off the week on a high note Monday, with investor sentiment buoyed by news that the United States would exempt key electronic goods from fresh tariffs.
This announcement offered a temporary breather from escalating trade tensions between Washington and Beijing, although underlying concerns remain firmly in place.
Markets in Hong Kong surged more than 2%, with other major exchanges—including Tokyo, Shanghai, Seoul, Sydney, Singapore, Wellington, Taipei, and Manila—all closing significantly higher.
The rally followed Wall Street’s strong finish on Friday, supported not just by tariff exemptions, but also by reassurances from a senior Federal Reserve official who signaled that the central bank is ready to step in if financial conditions worsen.
The White House’s decision to spare smartphones, semiconductors, computers, and other electronic devices from the sweeping “reciprocal” levies sparked cautious optimism across the globe. After a week marked by wild swings and uncertainty, this move provided a rare dose of stability for markets.
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Chris Weston of Pepperstone likened the moment to “chinks of light poking through the forest canopy,” suggesting that the market may see a brief return to calmer waters and improved liquidity—at least for now. However, the optimism was short-lived.
On Sunday, President Donald Trump appeared to walk back some of the goodwill his administration had generated, claiming on Truth Social that “NOBODY is getting ‘off the hook’… especially not China which, by far, treats us the worst!”
He further stated that new tariffs on semiconductors would be announced in the coming week, with Commerce Secretary Howard Lutnick indicating those could come into force “within a month or two.”
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In response, Chinese President Xi Jinping issued a measured statement, reiterating that protectionism “leads nowhere” and emphasizing that trade wars produce “no winners.” While China recently imposed steep 125% duties on U.S. goods, Xi hinted that Beijing may hold off on further retaliation—for now.
Meanwhile, markets remain wary. The dollar continued its downward slide, reflecting investor anxiety over the U.S. economic outlook. The greenback fell against all major currencies, with the euro hitting a three-year high and the Swiss franc reaching levels not seen in a decade.
Fears that China and other nations might begin unwinding their U.S. Treasury holdings added to the pressure. The potential exodus from American bonds raises questions about the U.S. dollar’s long-held status as a global safe haven.
Gold, the quintessential shelter in times of uncertainty, surged to a new record high of $3,245.75 on Monday. The weaker dollar and overall anxiety around trade policies helped fuel the rally.
Boston Federal Reserve President Susan Collins, in back-to-back interviews with The Financial Times and Yahoo Finance, warned that steeper tariffs could lead to a slowdown in economic growth and a spike in inflation. She noted that inflation could climb “well above” 3% this year, though she doesn’t foresee a major economic downturn at this point.
Collins assured that the Fed stands ready to act if markets falter. “We would absolutely be prepared to deploy our tools,” she said, reinforcing the central bank’s commitment to stabilizing the financial system during turbulent times.
In summary, while Monday offered a welcome respite for global markets—particularly tech-heavy exchanges in Asia—the mood remains fragile. With new tariffs on the horizon and trade rhetoric still heated, investors are far from in the clear. As gold hits new highs and the dollar falters, all eyes will be on Washington’s next move—and how Beijing chooses to respond.
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