Asia-Pacific Markets Experience Volatility as Investors Analyze Trump’s ‘Done’ Deal Claims with China

Asia-Pacific markets showed mixed results as investors reacted to U.S. President Donald Trump claiming a trade deal with China was finalized. He cited that Chinese imports could face a hefty 55% tariff, a figure backed by Commerce Secretary Howard Lutnick, confirming that this tariff level would persist.

In the market, Japan’s Nikkei 225 dropped by 0.58%, while the broader Topix slipped 0.24%. However, South Korea’s Kospi gained 0.83%, and the Kosdaq saw a rise of 0.79%. Meanwhile, Australia’s S&P/ASX 200 remained flat, and Hong Kong’s Hang Seng index fell by 0.51%.

Looking at the U.S., stock futures took a hit as traders analyzed a potential U.S.-China trade agreement alongside new inflation figures. The S&P 500 futures declined by 0.2%, matching the drop in Nasdaq 100 futures. The Dow Jones Industrial Average also fell by 72 points.

This downturn unfolded after the U.S. consumer price index increased by just 0.1% in May, falling short of predictions. Core CPI, which excludes food and energy prices, also came in lower than expected.

Trump indicated on social media that the trade deal with China was nearly done, pending final approval from President Xi. He mentioned that China would supply magnets and rare earth elements upfront, while the U.S. would permit Chinese students to attend American universities. Trump stated, "WE ARE GETTING A TOTAL OF 55% TARIFFS; CHINA IS GETTING 10%."

Market analysts expressed concern. Ed Yardeni from Yardeni Research noted that investors were evidently unsettled. ANZ economists also remarked that these higher tariffs would likely linger, impacting overall market sentiment.

Recent surveys indicate growing public concern about tariffs’ impact on everyday consumer prices. Research by the Federal Reserve suggests that many households are adjusting budgets due to potential increases in costs.

As markets remain volatile, the sentiment indicates a balance of cautious optimism and apprehension about ongoing trade negotiations and their ramifications on global economics. For deeper insights into the state of U.S.-China trade relations, you can check out this report from the Brookings Institution.

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