By Rae Wee
SINGAPORE (Reuters) – Investors were met with some calm on Friday after a turbulent week besieged by U.S. trade policy confusion and a global rise in borrowing costs, as a steep selloff in bonds abated and currencies steadied, though stocks tracked Wall Street lower.
Overnight the Nasdaq (^IXIC) confirmed it has been in a correction since peaking last December, as U.S. stocks face headwinds from a darkening growth outlook in the world’s largest economy and uncertainty over U.S. President Donald Trump’s tariff policies.
Trump on Thursday suspended the 25% tariffs he imposed this week on most goods from Canada and Mexico until April 2 – the day he has threatened to impose a global regime of reciprocal tariffs on all U.S. trading partners.
Trump’s fast-changing trade policy has sent markets into a tailspin, though currencies like the yen and the Swiss franc, as well as gold, have been among the few assets investors have flocked to as they seek out safety.
The Japanese currency was perched near its strongest level in five months at 147.95 on Friday, on track for a 1.8% weekly gain, while the Swissie scaled a three-month top of 0.8822 per dollar.
Gold prices eased slightly, but at $2,904.62 an ounce, were still not far from a record high. [GOL/]
“The rapidly shifting sands of U.S. tariffs are turning into quicksand for businesses in the U.S., Canada and Mexico to drown in,” said Tony Sycamore, a market analyst at IG.
“I’m not particularly confident at this point in time committing money to the market because there is just so much uncertainty out there. It’s a horrible, horrible backdrop for investors to be operating in.”
A sharp selloff in European bond markets triggered by Germany’s plans for a huge spending package showed some signs of tapering on Friday, with bund futures jumping more than 0.8% and French OAT futures up 0.7%. Bond yields move inversely to prices.
In Japan, government bonds extended their selloff, though to a smaller degree than in the previous session.
The 10-year Japanese government bond (JGB) yield rose 1.5 basis points to 1.53%, its highest level since June 2009, while the 20-year yield added 2 bps to a more than 16-year high of 2.22%. [JP/]
The surge in European borrowing costs this week has in turn sent the euro on a tear, with the common currency headed for its largest weekly gain in nearly five years on Friday at more than 4%. It last traded 0.07% higher at $1.0794.
The European Central Bank (ECB) on Thursday cut interest rates again but warned of “phenomenal uncertainty”, including the risk that trade wars and more defence spending could fuel inflation, raising the prospect of a pause in its policy easing next month.
