Financial markets across Asia displayed a marked divergence on Wednesday as heightened risk aversion took hold in response to fresh U.S. tariff threats. The U.S. dollar surged to a 2½-week high, drawing safe-haven flows away from regional assets.
Copper, a key industrial metal now in line for tariffs, exhibited elevated volatility—hitting intraday highs before retracting amid investor caution (cite). Meanwhile, gold prices slid as stronger yields made bullion less attractive, though the market remains attuned to shifts in trade policy.
Here’s how Asian markets responded:
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Japan’s Nikkei 225 advanced 0.3%, supported by cautious optimism following renewed diplomacy with Washington.
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South Korea’s Kospi edged up 0.5%, supported by investor optimism around Seoul’s push for tariff relief through high-level diplomacy.
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China’s CSI 300 edged up 0.3%, but its upside remained limited by tepid consumer data.
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Australia’s ASX 200 dropped 0.5%, with financials and energy sectors under selling pressure.
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Hong Kong’s Hang Seng declined 0.7%, dragged down by persistent political tensions and concerns over currency fluctuations.
Oil prices steadied following earlier gains, while Treasury yields climbed, reinforcing the strong dollar environment. Investors, it seems, are leaning into defensive positioning amid ongoing tariff ambiguity.
Market strategist Kyle Rodda noted that despite diplomatic overtures, tariff coverage remains broad—including sectors like semiconductors and pharmaceuticals—suggesting the risk-off stance could persist until more clarity emerges (cite).
With the August 1 deadline looming, traders are focusing on policy signals from Washington and key diplomatic capitals. The outcome may determine whether a temporary market pause turns into a more prolonged correction.
