Markets remained calm on Tuesday despite U.S. President Donald Trump issuing 25% tariff notices to 14 countries, including Japan and South Korea. The EU, however, was not on the list and may finalize a deal by Wednesday. Europe's STOXX 600 was unchanged, and the euro gained 0.4%. Optimism grew that countries would rush to strike agreements before the August 1 deadline.
In Asia, Japan's Nikkei edged up 0.26% after early losses, and MSCI's Asia-Pacific index outside Japan rose 0.6%. South Korea's KOSPI posted its best gain in two weeks, while the won firmed 0.6%. The yen slipped further against major currencies following the 25% tariff hike. Japanese Prime Minister Shigeru Ishiba called the move "deeply regrettable" but said talks will continue.
US Markets and Fed Outlook in Focus
Wall Street futures steadied after Monday's losses, where the Dow, Nasdaq, and S&P 500 each fell around 1%. Goldman Sachs raised its forecast for the S&P 500, citing possible rate cuts and strong large-cap stock performance. Still, with only two finalized trade deals—Britain and Vietnam—Trump's aggressive trade stance has raised concerns about global growth and inflation pressures.
These tensions may force central banks, including the Federal Reserve, to adjust their policies. For now, the Fed remains cautious and is waiting for clearer data before deciding on rate changes.
Currency Moves and RBA Surprise Hold
The U.S. dollar gained slightly against the yen, while the Australian dollar surged 0.8% after the Reserve Bank of Australia surprised markets by holding its rate at 3.85%. The central bank said more data was needed before cutting rates. The decision helped boost confidence in the Aussie market.
Elsewhere, the Thai finance minister said the country is preparing a plan to offset the impact of new 36% U.S. tariffs.
Oil Eases, Gold and Bonds Stay Quiet
Oil prices fell after a strong session on Monday. U.S. crude slipped 0.6% to $67.50 per barrel. Gold held steady, and bond yields across Europe and the U.S. were mostly unchanged as investors waited for more clarity on global trade and monetary policy.
