[SINGAPORE] Asian markets continued their rally on Tuesday (May 13) as investors cheered the announcement that the US and China would temporarily lower tariffs on each other’s products in a 90-day cool-off period.
Singapore’s Straits Times Index jumped about 1.8 per cent in morning trading to reach 3,944.78, as trading resumed following Monday’s Vesak Day break.
By 9.05 am, 139.2 million shares worth a collective S$305.6 million had changed hands. Gainers outnumbered decliners by 164 to 39.
Singapore banks opened strongly, with UOB surging 5.6 per cent or S$1.95 to reach S$36.78. DBS rose S$0.77 or 1.8 per cent to S$44.48, while OCBC climbed 1.8 per cent or S$0.29 to S$16.52.
The largest gainers were Yangzijiang Shipbuilding with a 6.6 per cent jump, as well as Mapletree Logistics Trust which rose 5.6 per cent. Sats also opened strong, with a 4.5 per cent climb.
In Hong Kong, the Hang Seng index dipped 0.8 per cent following a strong showing on Monday, while China’s Shenzhen and Shanghai stock exchanges witnessed their composite indices open 0.4 per cent and 0.2 per cent higher respectively.
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Following the announcement on Monday, the Hang Seng index had climbed 3 per cent to reach 23549.46 at the close, while the CSI 300 comprising stocks traded on the Shanghai and Shenzhen exchanges had climbed 1.2 per cent.
Japan’s Nikkei 225 index climbed about 2.2 per cent shortly after the bell, after closing 0.4 per cent higher on Monday.
The US and China had said in a joint announcement on Monday that they would pause the heavy reciprocal tariffs placed on each others’ products, with both sides saying they would cut existing tariffs by 115 per cent each. This brings levies of 145 per cent on Chinese imports by the US to 30 per cent, while China will reduce levies of 125 per cent on US goods to 10 per cent.
“As already evidenced by ongoing market reaction, this pause and cool-off period will help to extend the rally initiated in mid-April, mostly supported by the sentiment that the peak of trade uncertainties is behind us,” said Jean-Louis Nakamura, head of conviction equities at Vontobel.
US markets rallied following the news on Monday, with the S&P 500 index closing 3.3 per cent higher and the Nasdaq Composite index surging 4.4 per cent by the close. The Dow Jones Industrial Average had risen 2.8 per cent by the end of the day.
Gold fell about 2.7 per cent to US$3,239 an ounce, as investors shed fears to return to riskier assets such as equities. Gains in the US have largely recovered losses sustained in March and early April as Trump’s “liberation day” tariff announcements and recession fears rocked markets worldwide.
However, investor optimism may still be premature, Nakamura of Vontobel believes. “The reality is that while markets have retraced the totality of their correction experienced in the first ten days of April, implemented tariffs are still significantly higher than before,” he said.
“We have no clear view of the extent of damage done to the global economy in the meantime, particularly in the US and China,” Nakamura added, noting that economic data within the next two months would be instructive.
In South Korea, the Kospi index inched up 0.3 per cent after opening, which later moderated to 0.1 per cent.
