(Bloomberg) — Asian stocks snapped a five-day winning streak as a brief global relief rally gave up momentum after mixed signals from the Trump administration on its plans for China tariffs.
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A regional gauge of stocks fell 0.3% as market enthusiasm got curbed after Treasury Secretary Scott Bessent cast doubt on a timely resolution to the US-China trade war. Shares in Hong Kong dropped 1.2%, the first time in four days, while equity-index futures for the US and Europe declined. The yen flipped after two days of losses and the dollar weakened. Gold jumped 1.2% in increased demand for the safe-haven asset.
The global rally in stocks on Wednesday – after wild gyrations earlier this month – came on signs US President Donald Trump is rethinking the most-aggressive elements of his stances on trade and the Federal Reserve. Still, investors find it hard to forecast where the markets are headed amid a slew of headlines and frequent back-and-forth by Trump on his tariffs.
“It’s his negotiation style,” said Joshua Crabb, head of Asia Pacific equities at Robeco Hong Kong Ltd. “Key is to stay focused on the fundamentals and what is in the price on a scenario of outcomes. Margin of safety is more important now.”
Trump signaled that the US is going to have a fair deal with China, adding late Wednesday that the country may receive a new tariff rate in the next two to three weeks. The administration is also considering whether to reduce certain tariffs targeting the auto industry that carmaker executives have warned would deal a severe blow to profits and jobs.
Bessent said that Trump hasn’t offered to take down US tariffs on China on a unilateral basis. Asked if there was no unilateral offer from the president to de-escalate, he said “not at all.”
The Treasury secretary said that the administration is looking at multiple factors with regard to China beyond just tariffs — including non-tariff barriers and government subsidies. He also said that the strongest relationship between Washington and Beijing is at the top, and that there was no timeframe for engagement. A full re-balancing of trade might take two to three years, he said.
Investors should consider adding Chinese, Indian and European assets to re-balance their portfolios as the US stock market value has reached its peak and further corrections in equities, Treasury bonds, and the dollar are likely, according to Jefferies’ global head of equity strategy.
