Stocks Hold Steady, Dollar Stabilises Amid Easing of US Auto Tariff Concerns

SINGAPORE: On Tuesday, stocks and the dollar rose slightly as U.S. President Donald Trump's administration reacted to automakers' demands and announced it would ease certain tariffs, before a significant week of economic data and earnings reports. U.S. officials indicated that they would work to lessen the effects of tariffs on imported parts used in domestically produced vehicles and prevent additional duties from accumulating on foreign-made cars. European and S&P 500 futures rose by 0.1 per cent, though changes were constrained due to the lack of substantial relief on major Chinese tariffs.

A national holiday in Japan led to reduced currency trading in the Asian session, but the U.S. dollar rose overall, including against the Canadian dollar, which experienced a slight decline. Mark Carney's Liberals held onto power in the nation's election on Monday, yet did not achieve a majority government. Yet, although the S&P 500 (.SPX) has regained much of its early April declines following a partial retreat on Trump's tariffs, the dollar has only been able to stabilise, lacking a significant recovery. The euro, now priced at $1.1376 and rising 5 per cent in April, is poised for its biggest monthly increase against the dollar in almost three years, while the greenback's 6.7 per cent decline versus the safe-haven Swiss franc marks the steepest fall in a decade.

Overnight, markets were affected when U.S. Treasury Secretary Scott Bessent informed CNBC that it was "up to China to reduce" tariffs, raising increasing concerns that without a breakthrough, lasting harm will be inflicted on supply chains. China has decided to provide certain exemptions but has refrained from enacting stimulus, wagering that Washington will concede first. Hong Kong's Hang Seng rose 0.3 per cent during afternoon trading, while the mainland blue chip index dropped 0.2 per cent. Analysts at J.P. Morgan noted in a report that the first-quarter U.S. GDP and April job numbers expected this week may reflect increased purchases made in advance to avoid new taxes, but a decline in shipments from China indicates that a correction could be imminent.

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"The time is running out on robust data resilience," the analysts noted, emphasising a 42 per cent decline from peak to trough in shipments from China to the U.S. over the last 10 days, which, if continued, could impact supply chains. "A concerning separation of U.S.-China trade ... appears to be in progress, and we anticipate the impact to escalate in the upcoming weeks and months." In addition to U.S. data, inflation figures are set to be released in Europe, starting with Spain and Belgium later on Tuesday, along with significant corporate earnings. On Tuesday, BP, Adidas, Coca-Cola, General Motors, and Visa are scheduled to release their earnings, while major companies Apple, Microsoft, Amazon, and Meta Platforms will report later in the week. The robust dollar pushed gold down 1 per cent to $3,305 per ounce. Brent crude fell by 1 per cent to $65.21 per barrel. In Asia, Treasuries saw no trading activity, keeping benchmark 10-year yields at 4.206 per cent and futures largely unchanged.