Asian Markets and Dollar Show Gains Amid Trade Signals

Asian stock markets are on track for their second consecutive week of gains, while the U.S. dollar is poised for its first weekly increase in over a month. This occurs as investors respond positively to a perceived softening of the U.S. stance on trade relations with China, despite the absence of an official resolution.

Alphabet, the parent company of Google, exceeded earnings forecasts and reaffirmed its commitment to artificial intelligence investments. This news propelled its shares nearly 5% higher in after-hours trading, influencing gains in peer companies and pushing S&P 500 futures up by 0.5%.

On Wall Street, investors had previously absorbed a mix of corporate earnings reports, resulting in a 2% rise in the S&P 500.

The dollar, which has experienced volatility due to tariff-related announcements and shifts in U.S. assets, has stabilized around $1.1350 per euro and 143 yen. Dollar selling in Asia has decreased as of Friday.

Market Sentiment

Francesco Pesole, a currency strategist at ING, suggested that market participants may feel they have regained some influence over the U.S. government, potentially leading to a more favorable approach to key issues. He noted that investors will seek confirmation of this optimistic view to justify further dollar gains.

Following a period of reciprocal tariffs that effectively restricted trade between the U.S. and China, the U.S. has indicated that the situation is unsustainable.

Despite comments from U.S. President Donald Trump, China has stated that no trade discussions have taken place with Washington. Furthermore, China has cautioned other nations against entering into agreements with the U.S. that could be detrimental to China’s interests.

Christopher Wood, global head of equity strategy at Jefferies, observed that the recent equity rebound is a direct consequence of Donald Trump’s apparent shift in stance on tariffs, suggesting that the U.S. may not hold all the leverage in this situation.

Regional Market Performance

In Japan, the Nikkei rose by 1.4% on Friday, recovering losses incurred since Trump’s April 2 announcement of tariff increases. These levies have been largely suspended, with exceptions for China and a baseline tariff of 10%.

  • Tech shares spearheaded gains, with electric-motor manufacturer Nidec’s stock soaring 11% following a record annual profit forecast.
  • Nissan shares also saw a 2% increase as investors speculated that the worst may be over, despite the automaker projecting a record net loss.

The Hang Seng in Hong Kong increased by 0.9%, while the Shanghai Composite and blue-chip CSI300 in mainland China experienced minor gains.

The U.S. dollar index registered a 0.4% weekly gain, reaching 99.619.

Markets in Australia and New Zealand were closed for a public holiday.

Market Cautions

Despite the relative calm, there are indications that this stability may be short-lived.

  • Gold remained steady at $3,349 an ounce.
  • Analysts at Philip Securities in Singapore pointed out that the Gold/S&P 500 ratio, an indicator of investor apprehension, has reached its highest level since the market downturn of 2020.

Procter & Gamble, PepsiCo, Chipotle Mexican Grill, and American Airlines have all recently reduced or retracted forecasts, citing heightened consumer uncertainty.

The U.S. Treasury market continues to face pressure, experiencing a sell-off triggered by concerns over U.S. trade policies, which has left 10-year yields at 4.3168% on Friday.