Global stock markets traded within a narrow range on Tuesday, as renewed concerns about U.S. tariffs and their impact on global economic growth weighed heavily on investor sentiment. Meanwhile, the U.S. dollar attempted a modest comeback, recovering some of its recent losses against Asian currencies amid heightened foreign exchange volatility.
Oil prices remained under pressure as well, staying near four-year lows. The drop comes on the back of commitments from key producers to increase supply, compounding worries over weaker global demand.
Since April, unpredictable trade policies under U.S. President Donald Trump have spurred waves of dollar selling. This trend has boosted safe-haven currencies such as the euro, Japanese yen, and Swiss franc.
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More recently, that dollar weakness has extended into Asia, where currencies like the Taiwan dollar have seen record gains, fueling speculation of a regional FX revaluation to gain leverage in trade negotiations with Washington.
The Taiwan dollar’s sharp rally suggests that exporters and financial institutions—who have historically maintained large dollar reserves—may now be unwinding these positions, adding to market unease.
In Hong Kong, authorities took aggressive action to maintain their currency’s peg to the U.S. dollar. The de facto central bank purchased $7.8 billion on Tuesday to prevent the local dollar from rising further.
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“The real action today is in Asian FX,” noted Charu Chanana, Chief Investment Strategist at Saxo Bank in Singapore. “If these currencies continue strengthening rapidly, it could spark fears of a ‘reverse Asian currency crisis,’ potentially shaking bond markets if institutions re-evaluate their unhedged exposure to U.S. Treasuries.”
On the mainland, the Chinese yuan climbed to its highest level since March 20, trading at 7.23 per dollar. The Taiwan dollar was steady at 30.185 per dollar after hitting a near three-year high of 29.59 on Monday.
Asian equities showed mixed movements. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2%, with Japanese markets closed for a national holiday. Chinese blue-chip stocks gained nearly 1% as markets reopened after an extended break, while Hong Kong’s Hang Seng Index advanced 0.69%. Taiwan’s benchmark index remained largely flat.
In Europe, stock futures pointed to a subdued open, as investors awaited fresh manufacturing data that could offer clues on how tariffs are impacting industrial activity. U.S. stock futures also dipped slightly in early trading.
Investor hopes for easing U.S.-China trade tensions were tempered by a lack of clarity from Washington. Although Beijing confirmed it is evaluating a new proposal for trade talks, details remain scarce.
President Trump stated over the weekend that Washington is in talks with multiple nations, including China, but emphasized that securing a “fair deal” remains his top priority. On Monday, Trump unexpectedly announced a 100% tariff on foreign-produced films, but stopped short of explaining how or when the new tariffs would be applied, further muddying the waters for investors.
Recent economic data added to the complexity. U.S. services sector growth picked up in April, but a key inflation gauge—tracking prices paid by businesses—hit a two-year high, suggesting inflationary pressures are mounting due to tariffs.
Markets are now turning their attention to the Federal Reserve’s upcoming policy decision on Wednesday. While interest rates are expected to remain unchanged, analysts will be watching closely for any signals on how the Fed plans to navigate the increasingly unpredictable trade landscape.
With global markets navigating choppy waters—ranging from tariff threats and volatile currency moves to fluctuating oil prices and inflation signals—investors are treading cautiously. Until clearer signals emerge from Washington and global economic indicators stabilize, market volatility is likely to persist.
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