Stocks rise on electronics tariffs exemption, gold hits new high

HONG KONG: Stocks rose on Monday as trade war fears were tempered by Donald Trump’s announcement of tariff exemptions for electronics, although the dollar weakened and safe-haven gold hit a fresh record amid fears the relief would be short-lived.

After the wild gyrations witnessed last week, markets got off to a relatively stable start following Friday’s news that the White House would exempt smartphones, semiconductors, computers and other devices from painful “reciprocal” levies. The announcement provided a much-needed injection of optimism for investors who had been sent scurrying for the hills in the wake of the US president’s tariff flip-flops and tit-for-tat measures by China.

All three main indexes on Wall Street finished solidly higher, helped by comments from a top Federal Reserve official that the central bank was prepared to step in to support financial markets.

Asia followed suit, with tech firms helping push Hong Kong more than 2.0 per cent higher, while Tokyo, Shanghai, Sydney, Seoul, Singapore, Wellington, Jakarta and Manila were also well up.

London, Paris and Frankfurt also saw big gains in the morning, while US futures were all sharply higher. “After a period of chaotic price action, chinks of light poke through the forest canopy providing a much-needed guide to the entities that price risk and liquidity for a living, which in turn, may see liquidity conditions improve and a relative calm return to markets,” said Chris Weston at Pepperstone.

However, Trump looked to temper the remarks on Sunday, saying the exemptions had been misconstrued and writing on his Truth Social platform that “NOBODY is getting ‘off the hook’... especially not China which, by far, treats us the worst!”

He said he would announce new tariffs on semiconductors “over the next week”. His commerce secretary, Howard Lutnick, said earlier chip levies would likely be in place “in a month or two”.

‘No winners’

Chinese President Xi Jinping said on Monday that protectionism “leads nowhere” and that a trade war would have “no winners”, days after Beijing hit US goods with 125 per cent duties but also suggested it would not retaliate further in the future.

Washington has ramped up tariffs on Chinese goods to 145 per cent and excluded it from a 90-day pause of crippling levies the White House announced on Wednesday. Data on Monday showed Chinese exports soared more than 12 per cent last month as businesses rushed to get ahead of the swingeing tariffs, with the United States remaining the largest single destination, accounting for $115.6 billion worth of goods.

“But shipments are set to drop back over the coming months and quarters,” warned Julian Evans-Pritchard, head of China economics at Capital Economics. “It could be years before Chinese exports reg ain current levels.”