Asian equities showed signs of positive movement on Friday as markets reacted optimistically to the news that U.S. reciprocal tariffs may take weeks to be implemented, providing an opportunity for negotiations that could soften their impact. Shares in Australia and South Korea saw gains, while stocks in Japan and China fluctuated. U.S. equity index futures remained largely unchanged after the S&P 500 neared a new high on Thursday, helping global share indices reach a record closing peak. Both the yen and South Korean won strengthened against the U.S. dollar.
Investor sentiment was buoyed by hopes that ongoing negotiations could reduce the potential damage from the tariffs, mirroring the market’s earlier response to delays in tariffs on Canada and Mexico earlier this month. Howard Lutnick, Trump’s nominee to lead the U.S. Commerce Department, stated that the process of proposing reciprocal tariffs would be carried out on a country-by-country basis and could stretch into April, leaving room for diplomatic talks.
This news followed Trump’s order for his administration to explore reciprocal tariffs on a variety of trading partners, singling out Japan and South Korea as countries that, in his view, are benefiting from trade imbalances with the U.S. As a result, the currencies of Japan and South Korea saw further strength against the dollar on Friday, building on Thursday’s advances. The dollar index remained stable after experiencing its largest drop in three weeks during the previous session.
“The gradual pace of Trump’s approach, with the potential for many tariffs to be rescinded, is giving a boost to market confidence,” said Kyle Rodda, senior market analyst at Capital.com.
In bond markets, U.S. Treasury yields held steady in early Asian trading after a rally the previous session. Australian and New Zealand bond yields dropped early on Friday.
Trump also mentioned that he would discuss India’s purchases of U.S. oil and gas during his meeting with Indian Prime Minister Narendra Modi. The meeting, however, was overshadowed by the announcement of reciprocal tariffs just hours before Modi’s arrival at the White House.
In corporate news, U.S.-based private equity firm KKR & Co. is considering an investment in Nissan Motor Co., after failed talks for a merger with Honda. Sony Group Corp. saw its shares rise after the entertainment giant raised its profit and revenue outlook, while Taiwan Semiconductor Manufacturing Co.’s stock dropped amid concerns over its engagement with Intel.
In economic data, South Korea’s unemployment report, Malaysia’s GDP figures, and India’s wholesale prices were all due for release on Friday.
Meanwhile, oil prices ended little changed on Thursday, bouncing back from their lowest levels since December. The unclear timeline for Trump’s tariff plans counteracted fears of potential disruptions to Russian oil supplies.
Wall Street traders largely dismissed the hot inflation data, focusing instead on signs that the Federal Reserve’s preferred inflation gauge would show softer results than initially feared. The U.S. producer price index (PPI) rose more than expected in January, but key components, which contribute to the Fed’s personal consumption expenditures (PCE) price index, showed favorable declines, particularly in healthcare costs and airfares. The next PCE report is set for release on February 28.
“While PPI was much higher than expected, the real data that goes into PCE was weaker,” said Andrew Brenner of NatAlliance Securities. “And PCE is the one that Jerome Powell and the Fed look at, so in reality, the numbers are better.”
In commodities, gold rose for a second consecutive day, approaching its record high set earlier this week. The precious metal has surged this year, driven by haven demand, with analysts suggesting it could test the $3,000 per ounce mark in the near future.
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