Asian markets struggled on Thursday despite Wall Street’s S&P 500 and Nasdaq reaching record highs for the third time in four days. Investors reacted cautiously to former US President Donald Trump’s newly announced trade deal with Vietnam while turning their focus to upcoming US jobs data that could influence Federal Reserve policy decisions.
Hong Kong’s Hang Seng Index led regional losses, dropping 1.1% in early trade, while Shanghai and Tokyo both dipped by 0.1%. Markets in Sydney and Wellington also weakened, though gains were recorded in Singapore, Seoul, Taipei, Manila, and Jakarta.
Trump announced the trade agreement on his Truth Social platform, calling it a “Great Deal of Cooperation.” Under the terms, Vietnamese exports to the US will face a 20% tariff, while transshipped goods routed through Vietnam to avoid steeper levies will be hit with a 40% tariff. While the deal spares Vietnam from the harsher 46% tariff imposed in April, local traders viewed it skeptically, resulting in a market decline in Hanoi.
The trade deal comes ahead of Trump’s July 9 deadline for avoiding his so-called “Liberation Day” reciprocal tariffs, with only three countries having finalized agreements so far. South Korea’s President Lee Jae Myung warned that negotiations with Washington remained difficult, raising fears of renewed global trade tensions.
Meanwhile, investor attention has shifted to Friday’s US non-farm payrolls report after a private sector jobs report on Wednesday showed the first decline since March 2023. This has fueled market speculation that the Fed could accelerate rate cuts, with traders pricing in up to three cuts this year, potentially beginning as early as July.
“The payrolls report is the key data point,” said Taylor Nugent of National Australia Bank. “Unless there’s a sharp downturn in the labor market, the Fed is likely to wait for more clarity on inflation before acting.”
The dollar eased on expectations of rate cuts, with the euro rising to $1.1808 and the pound climbing to $1.3650. The dollar slipped against the yen to 143.58.
US Treasury yields rose amid concerns over Trump’s proposed tax-cutting budget, dubbed the “Big, Beautiful Bill,” which faces congressional resistance and criticism for potentially adding $3 trillion to the national debt, further unsettling markets.
Key Asian market figures as of 0230 GMT:
- Tokyo – Nikkei 225: +0.1% at 39,732.63
- Hong Kong – Hang Seng Index: -1.1% at 23,948.73
- Shanghai – Composite: -0.1% at 3,450.80
- Euro/dollar: $1.1808
- Pound/dollar: $1.3650
- Dollar/yen: 143.58 yen
- WTI crude: +0.9% at $66.85/barrel
- Brent crude: +0.9% at $68.48/barrel
- New York – Dow Jones: Flat at 44,484.42 (previous close)
- London – FTSE 100: +0.1% at 8,774.69 (previous close)
Overall, market sentiment remains cautious as traders balance geopolitical risks, global trade uncertainties, and the upcoming US jobs data, which could set the tone for the Federal Reserve’s rate decisions in the months ahead.
