Asian Stocks Tread Water as Trade De-escalation Optimism Wanes

Most Asian indices edged higher on Thursday, but gains were muted as recent enthusiasm over a U.S.-China tariff thaw gave way to fresh doubts. Japan led the bounce on reports of renewed U.S.-Japan trade talks, while South Korea's KOSPI underperformed after GDP data disappointed.

Market Moves at a Glance

• Nikkei 225: +0.9%

• TOPIX: +0.8%

• MSCI Asia ex-Japan: +0.5%

• KOSPI: -0.3% (Q1 GDP contraction offsetting strong SK Hynix earnings)

• U.S. Futures: S&P 500 Futures +0.4%

Drivers of Caution

Tariff Reduction Still Remote

• Trump's Comments: President Trump signaled eventual tariff cuts on China—but only if Beijing initiates talks.

• Beijing's Silence: Chinese officials have shown little appetite to approach Washington first, tempering hopes.

Fed Independence Reprieve

• Powell Threat Off: Trump walked back plans to fire Fed Chair Powell, easing one source of market volatility—but the relief is fading.

Japan's Trade Dialogue Boost

• Ministry Visit: Reports say Japan's Economic Revitalization Minister will hold a second round of talks in the U.S.

• Autos Lift: Toyota (+5%) and Honda (+2%) rallied on news auto parts might be exempted from Trump's 25% vehicle tariffs.

Sector Valuations to Watch

Against this backdrop, understanding sector valuations can help identify pockets of relative value. Compare current P/E multiples for Technology, Industrials, and Automobiles via the
🔗 Sector PE Ratio - Market Overview API
from Financial Modeling Prep.
This API provides up-to-date valuation metrics, helping you gauge where defensive or cyclical exposure may be most attractive.

What's Next

• Flash PMIs (Wed): Early gauge of how trade shifts impact manufacturing and services.

• Korean GDP Revisions: Watch for any upward revisions that could boost the KOSPI.

• Trade Announcements: Any formal schedule for U.S.-China or U.S.-Japan talks will dictate market direction.

With trade rhetoric swirling and macro data mixed, Asian markets may remain range-bound until clearer policy signals emerge. Positioning around sectors with stronger valuations and tighter fundamentals will be key in navigating this cautious environment.