Asian shares climbed along with US equity-index futures as investors looked past President Donald Trump’s threat of a 100% tariff on chip exports to the US. Technology stocks jumped.
MSCI’s Asian stock gauge rose 0.9% while contracts for the S&P 500 and Nasdaq 100 gained 0.3%. Trump said he would impose the levy on imports of semiconductors, but will provide exemption for companies moving production back to the US. Shares in Nvidia Corp. rose in after-hours trading while Samsung Electronics Co. gained 2.6% in Seoul. Taiwan Semiconductor Manufacturing Co. jumped almost 5%.
Oil edged higher after a five-day decline as investors looked beyond US efforts to punish buyers of Russian crude like India. The yields on 10-year Treasuries rose one basis point to 4.24% while a gauge of the dollar was little changed.
While the tariff headline raised some concerns, investors took comfort from announcements that companies will get exemptions, analysts said. Increasing speculation on an interest-rate cut by the Federal Reserve and expectations that corporations will withstand headwinds from trade tariffs have helped lift stocks to record high levels since their April slump.
“To some degree this outcome would be something of a relief,” Morgan Stanley analysts including Joseph Moore wrote in a note. “Yes, 100% tariffs are unpalatable, but if companies are given time to restore them, the real tax is just the higher cost of building chips in the United States.”
Trump said the US would charge “a tariff of approximately 100% on chips and semiconductors,” late Wednesday in the US. He added “but if you’re building in the United States of America, there’s no charge.” The comments came as Apple Chief Executive Officer Tim Cook unveiled a $100 billion US investment plan alongside Trump in the Oval Office.
Trump so far has exempted electronics including smartphones, computers and monitors from his nation-specific reciprocal tariffs, which are set to increase for many trading partners Thursday morning. He indicated those products would be hit as part of a separate forthcoming action on imports that include semiconductors.
Taiwan said TSMC is exempted from the US levy. South Korea also said chips from Samsung Electronics and SK Hynix won’t be subject to the 100% tariffs.
Trump’s move is “unlikely to disrupt major supply chains,” said Billy Leung, a Sydney-based investment strategist at Global X ETFs. The policy is not yet in force, and no formal executive order or legal mechanism has been published, he said.
Meanwhile, Fed San Francisco President Mary Daly said policymakers will probably need to adjust rates in coming months to prevent further weakness in the labor market.
Data published last week pointed to a sharp cooling in the labor market over the last few months.
Daly’s Minneapolis counterpart Neel Kashkari said an economic slowdown may make a rate cut appropriate in the near term.
Policymakers left rates unchanged at the end of July and next meet in September. They have two more meetings after that in 2025.
Separately, Trump indicated he would likely nominate a temporary Fed governor to fill the soon-to-be vacant seat on the central bank’s board within the coming days, rather than use the seat to signal his choice to replace Jerome Powell as chairman.
In geopolitical news, Trump told European allies he’s planning to meet with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy as soon as next week in another bid to bring peace between the two countries.
In other tariff news, the US also imposed an additional 25% tariff on Indian goods, effectively doubling the rate announced days earlier, over its ongoing purchases of Russian energy.
“India is probably more stuck between a rock and a hard place,” said Anna Wu, a cross-asset strategist at investment management firm VanEck in Sydney. “In the near term, I see both equities and the Rupee under pressure.”
Also, Switzerland’s president left Washington without announcing any success in lowering the 39% tariff that Trump has put on her country.
Investors will also be monitoring an auction of 30-year government debt on Thursday. While the previous 30-year offering in July cleared smoothly, traders were bracing for a more cautious outcome this time as speculation swirled over Prime Minister Shigeru Ishiba’s potential resignation.
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