By Ankur Banerjee
SINGAPORE (Reuters) – Asian stocks inched lower on Friday in a subdued end to the week as deepening geopolitical worries and fears over U.S. tariffs and their impact on the global economy curbed investors appetite for risk, keeping safe-haven gold near record highs.
Policymakers across the globe struck a cautious note in a week filled with central bank meetings as uncertainty in global economics and politics grew. The U.S. Federal Reserve, the Bank Of Japan and the Bank of England all held rates steady.
Central bankers highlighted the unsettled economic outlook due largely to rising trade tensions triggered by the United States under President Donald Trump. Trump intends to impose new reciprocal tariff rates on April 2.
Reports of Israeli airstrikes on Gaza and a huge blast from a Ukrainian drone attack on a Russian military airfield were a reminder of rising geopolitical tensions pushing investors towards safe haven assets.
“With the bar for near-term rate cuts still high, markets have shifted focus back to growth concerns and tariff risks which will continue to fuel volatility,” said Charu Chanana, Saxo’s chief investment strategist.
Asian stocks, taking cues from Wall Street, were subdued, with MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.22%. Japan’s Nikkei, however, was up 0.38% led by banking stocks.
U.S. stocks closed slightly lower overnight after veering between gains and losses. Futures for S&P 500 and Nasdaq inched higher in Asian hours, while European futures were little changed. [.N]
Chinese stocks eased slightly in early trading. Hong Kong’s Hang Seng index was 0.68% lower after a 1% drop on Thursday as investors turned cautious following a surge in tech stocks and the index hitting a three-year high on Tuesday. [.HK]
Investors will now focus on the details of the Trump administration’s April 2 tariffs as markets become increasingly nervous about the impact of tit-for-tat tariffs on inflation and economic growth.
Ray Sharma-Ong, head of multi-asset investment solutions for Southeast Asia at Aberdeen Investments, said the main uncertainty revolves around the size of reciprocal tariffs, which may lead to markets repricing further downside risks to growth.
The growing uncertainty and the Fed reiterating that it was in no rush to cut rates lent support to the dollar. The dollar index measure against a basket of six counterparts was steady at 103.84, after climbing 0.36% on Thursday.
The index fell to a five-month low this week as hopes for growth-friendly policies under Trump gave way to anxiety that the global trade war he started could trigger a U.S. recession. [FRX/]
The yen was at 149.11 per dollar in early trading close to the near five month high of 146.545 touched last week. The yen is up 5% this year on expectations that the BOJ will hike rates again in 2025.
Data showed Japan’s core inflation hit 3.0% in February and an index stripping away the effect of fuel rose at the fastest pace in nearly a year, a sign of broadening price pressure that reinforces market expectations of further interest rate hikes.
“Although Governor Ueda made much of the risks surrounding U.S. trade policy on Wednesday, we think he’s just hedging his bets – considering it a risk factor,” said Min Joo Kang, senior economist at ING.
“Therefore, if trade tensions don’t escalate more than the market currently expects, they won’t affect the BOJ’s rate hike plans.”
In commodities, oil prices rose on Friday, poised for their strongest weekly performance since January.
Brent crude futures climbed 0.5%, while U.S. West Texas Intermediate crude futures were up 0.6%. Both were set for 2% gains for the week.
Gold eased a bit at $3,037.27 a touch below the record high of the previous session, but on course for the third straight week of gains, supported by safe-haven demand.
(Editing by Kate Mayberry)
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