Asian Markets Decline as Traders Assess US Rate Cut Prospects Ahead of Trump's Tariff Deadline
Published at：2025年07月02日 15:08
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Asian equities retreated on Wednesday, with regional benchmarks pulling back from recent highs as market participants evaluated the likelihood of U.S. Federal Reserve rate cuts while preparing for potential trade disruptions ahead of President Trump's July 9 tariff deadline. The U.S. leader confirmed he would not extend the negotiation period for new trade agreements, expressing skepticism about reaching a deal with Japan but optimism regarding an imminent accord with India.
The MSCI Asia Pacific ex-Japan index slipped 0.23% in early trading, stepping back from last week's record peak. Japan's Nikkei 225 declined 0.78%, pressured by tech sector losses, while Taiwan's Taiex dropped 0.31% and South Korea's Kospi fell 0.87% - mirroring the pullback in U.S. technology stocks following their strong June performance.
Market focus remains on Thursday's nonfarm payrolls report after Tuesday's data showed U.S. job openings rising in May, reinforcing labor market strength. Federal Reserve Chair Jerome Powell emphasized a cautious approach, stating policymakers need to 'wait and learn more' about how tariffs might impact inflation before adjusting monetary policy, despite pressure from the White House for immediate rate cuts.
Currency markets saw the dollar hovering near multi-year lows, with the euro trading at $1.1799 near Tuesday's three-and-a-half-year high. Analysts warn that weak economic data could accelerate expectations for Fed easing, potentially triggering further dollar weakness. The U.S. currency has already depreciated over 10% this year - its worst first-half performance since the 1970s.
Investors are also monitoring the economic implications of Trump's substantial tax and spending package, estimated to add $3.3 trillion to federal debt, which narrowly passed the Senate and now moves to the House for approval. Gold prices consolidated at $3,332.19/oz after Tuesday's 1% gain, having rallied 27% year-to-date as investors seek safe-haven assets amid growing economic uncertainties.
The MSCI Asia Pacific ex-Japan index slipped 0.23% in early trading, stepping back from last week's record peak. Japan's Nikkei 225 declined 0.78%, pressured by tech sector losses, while Taiwan's Taiex dropped 0.31% and South Korea's Kospi fell 0.87% - mirroring the pullback in U.S. technology stocks following their strong June performance.
Market focus remains on Thursday's nonfarm payrolls report after Tuesday's data showed U.S. job openings rising in May, reinforcing labor market strength. Federal Reserve Chair Jerome Powell emphasized a cautious approach, stating policymakers need to 'wait and learn more' about how tariffs might impact inflation before adjusting monetary policy, despite pressure from the White House for immediate rate cuts.
Currency markets saw the dollar hovering near multi-year lows, with the euro trading at $1.1799 near Tuesday's three-and-a-half-year high. Analysts warn that weak economic data could accelerate expectations for Fed easing, potentially triggering further dollar weakness. The U.S. currency has already depreciated over 10% this year - its worst first-half performance since the 1970s.
Investors are also monitoring the economic implications of Trump's substantial tax and spending package, estimated to add $3.3 trillion to federal debt, which narrowly passed the Senate and now moves to the House for approval. Gold prices consolidated at $3,332.19/oz after Tuesday's 1% gain, having rallied 27% year-to-date as investors seek safe-haven assets amid growing economic uncertainties.
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Asian markets
US rate cuts
Trump tariffs
dollar weakness
economic uncertainty