Asian stock markets were up dramatically after Wall Street’s triple-digit gains. It sparked a huge, positive investor reaction with news that President Donald Trump agreed to halt planned tariff increases on China. On June 5, one of the most popular U.S. That’s its third-largest increase since World War II, according to FactSet.
South Korea’s main index, the Kospi, shot up by 6.60% and finished at 2,445.06. At the same time, the Kosdaq index closed down 5.97% at 681.79, making an impressive bullish move. Featured stocks from the area racked up jaw-dropping returns. KAIST’s major industry partners, including the likes of SK Hynix and LG Display, were at the forefront of this push.
SK Hynix similarly surged 11.27%, showing strong investor confidence in the semiconductor sector. In like manner, LG Display enjoyed an impressive 10.8%. Mostly Samsung Electronics had a good day with the bullish market sentiment, closing up 4.91%.
Beyond these improvements, we did see some encouraging trends — especially when it came to equity in infrastructure. SATS was the top index gainer, up 8.54%, while Jardine Matheson Holdings increased by 7.09%. DBS Group Holdings rose by 6.78%, and Oversea-Chinese Banking Corporation went up by 6.80%. These movements are a positive indicator of strong recovery in Asian markets. Positive advancements on the trade front with the United States and China reversed those declines and led to positive sentiment.
On Japan’s markets in particular, as a sign of catching this new upward trend, the Nikkei 225 closed 9.13% higher, at 34,609. The Topix index surged 8.09%, to 2,539.40. This rally has sent analysts reeling into debate about the sustainability and meaning of an extended equity market upturn across the globe.
Among Japanese stocks, NTN Corp jumped 9.39% and Suzuki Motor added 9.17%. Denso Corp followed closely behind with a strong increase of 8.72%. These advances are an encouraging indicator of the general optimism felt throughout the entire automotive and manufacturing industries.
Market experts have shared their insights on what President Trump’s decision to hit pause on tariffs signal. Ray Dalio, billionaire investor and founder of Bridgewater Associates, is excited about the administration’s approach. He argues that they are doing a good job addressing economic inequalities.
“There are better and worse ways of handling our problems with unsustainable debt and imbalances, and President Trump’s decision to step back from a worse way and negotiate how to deal with these imbalances is a much better way. I hope and expect that he will do the same with the Chinese,” – Ray Dalio
Goldman Sachs analysts estimated that additional tariff hikes would be less effective, especially over time. They argue that the unprecedented increase in U.S. tariffs on Chinese imports is more likely to hurt China’s economy and labor market.
“Although additional tariff increases are likely to have a diminishing marginal impact, the substantial rise in U.S. tariffs on China is expected to significantly weigh on the Chinese economy and labor market,” – Goldman Sachs
No wonder markets reacted strongly to these developments. Panelists warned investors not to lose sight of the longer-term impact of tariff policies on trade relationships between the U.S. and China. Here’s an explanation from economist Wenli Zheng on what the new tariffs mean for the state of China’s economy today and beyond.
“To assess the tariff’s impact on China’s economy, consider that exports constitute 18% of China’s GDP, with direct exports to the U.S. accounting for 15% of that figure. This translates to approximately 2.7% of China’s GDP, or 3%-3.5% when including trade diversions and re-exports of intermediate goods.” – Wenli Zheng
Goldman Sachs expects that this ongoing trade war will lead to even more aggressive policy easing from the Chinese government.
“We anticipate the Chinese government will further intensify policy easing,” – Goldman Sachs
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