Asian and European stock markets rally despite Trump's tariff letters, as the deadline is extended. Gold firms and AUDUSD rebounds ahead of the RBA decision.
No major risk-off for Asian equities, Aussie dollar outperforms, Gold recovers as Trump extends the tariff deadline
Despite a slew of tariff letters that US President Trump sent out (14 in total so far) on Monday, 7 July, most of the Asian stock markets did not experience a major risk-off episode akin to the 1 April “Liberation Day” tariffs announcement. Still, they rallied and hit their respective three-to five-day highs in today’s Asian mid-session at this time of the writing.
“TACO-Trump always chickens out” vibes are visible in the trading patterns that are being exhibited in most Asian benchmark stock indices, as the White House administration, while sending out the tariff letters to warn Japan and South Korea of a 25% tariff rate and a 30% set on South Africa, levies set on other Asian countries – Malaysia (25%), Thailand (36%), Indonesia (32%), Cambodia (36%), Myanmar (40%), and Laos (40%)— Trump extended the 9 July expiration deadline to 1 August for all US trading partners. It even floated the possibility of extending beyond 1 August to finalise trade negotiations.
Also, take a look at our chart of the week, USD/CHF, here
Hong Kong’s Hang Seng Index rallied by 0.7%, and Singapore’s Straits Times Index continued to be a stellar performer for the second consecutive session as it advanced by 0.6% and scaled towards a fresh all-time intraday high of 4,057. South Korea’s KOSPI 200 gained 2%, while Japan’s Nikkei 225 inked out a modest intraday return of 0.4%.
The European stock markets outperformed their US counterparts yesterday, as Trump’s tariff letters were not sent out to any European trading partners. Media reports indicated that an EU-US preliminary trade deal framework may be settled by this week to allow the EU to lock in a 10% tariff rate beyond the 1 August deadline as both nations negotiate a permanent agreement.
Germany’s DAX rose by 1.2% to hit a four-day high versus a -0.8% loss seen on the US S&P 500 that has been trimmed from an earlier intraday loss of 1.25%. In today’s Asian session, the S&P 500 and Nasdaq 100 E-mini futures have staged a marginal intraday recovery of 0.1% and 0.2% respectively.
Mixed performances are being seen in the FX market, the Aussie dollar (0.7%), the Kiwi dollar (0.4%), and the Euro (0.2%) rose against the US dollar, while the Japanese yen dropped by -0.1%.
The AUD/USD outperformed with a bullish reversal, retracing roughly half of yesterday’s losses and reclaiming its 20-day moving average, which now serves as intermediate support at 0.6520. The rebound appears driven by market expectations of a 25-basis point rate cut by the RBA, which is now almost fully priced in ahead of today’s policy decision.
Gold (XAU/USD) has managed to trade back above its 50-day moving average after yesterday’s intraday decline of -1.2%. The yellow metal ended Monday’s US session almost unchanged and formed a daily “Hammer” bullish candlestick pattern. The 50-day moving average is acting as an intermediate support at around US$3,322.
Our YouTube video above contains the latest intraday technical analysis on the latest intraday technical analysis on US Wall Street 30, US Nas 100, US SPX 500, Hong Kong 33, Japan 225, Germany 30, EUR/USD, GBP/USD, AUD/USD, USD/JPY, Gold (XAU/USD), and West Texas Oil.
