Asian shares mostly dropped on Tuesday as fears over new U.S. tariffs from President Donald Trump weighed on investors. Markets showed mixed moves with some gains, but overall cautious trading continued.
Japan’s Nikkei 225 inched up 0.1% to 39,507.28 in early trading. Australia’s S&P/ASX 200 gained 0.4%, reaching 8,602.70. On the other hand, South Korea’s Kospi slipped 0.2% to 3,195.72. Hong Kong’s Hang Seng dropped 0.1% to 24,172.79, while China’s Shanghai Composite declined nearly 0.9%. The slide in China’s market followed government data showing slower growth amid the escalating U.S.-China trade conflict.
China’s economy grew at a 5.2% annual pace in the latest quarter, down from 5.4% in the previous one. On a quarterly basis, growth was 1.1%. These figures highlight the trade war’s impact on the world’s second-largest economy.
Although traders are concerned about the potential harm Trump’s tariffs could cause to exporters in Asia, many believe the president might soften his stance. The tariffs are set to take effect on August 1, giving time for further talks and possible delays.
On Wall Street Monday, markets were modestly positive. The S&P 500 rose 0.1%, the Dow Jones Industrial Average climbed 0.2%, and the Nasdaq Composite gained 0.3%.
A major event in Japan also added uncertainty. The country’s upper house election is scheduled for Sunday. Experts think the ruling Liberal Democratic Party, which supports business interests, may face challenges and might need to form new coalitions to maintain control.
If Trump imposes all the planned tariffs on August 1, it could increase the risk of a recession. This would hurt U.S. consumers and strain government finances, especially after recent tax cuts that have increased the budget deficit.
Ulrike Hoffmann-Burchardi, global head of equities at UBS Global Wealth Management, said the U.S. administration is likely using tariffs to strengthen its bargaining power. She believes the tensions will ease, especially if markets face more volatility.
Brian Jacobsen, chief economist at Annex Wealth Management, noted there are many ways tariffs can be reduced or delayed. This might explain why markets are uneasy but not panicking.
For now, tariff uncertainties could keep markets shaky. Several key events this week could impact investor mood.
On Tuesday, the U.S. will release new inflation data. Economists expect inflation to rise to 2.6% in June, up from 2.4% in May.
Big companies are also reporting earnings this week. JPMorgan Chase and other major banks report Tuesday. Johnson & Johnson and PepsiCo follow on Wednesday and Thursday.
Fastenal, a supplier of industrial goods, posted stronger-than-expected quarterly profits on Monday. Its shares rose 2.9%, although the company said market conditions remain slow.
Shares of Kenvue, a spin-off from Johnson & Johnson known for brands like Listerine and Band-Aid, climbed 2.3%. The company announced CEO Thibaut Mongon is stepping down as it reviews its strategy to simplify operations.
Cryptocurrency markets saw notable activity, with bitcoin hitting new highs. This week is “Crypto Week” in Washington, where lawmakers will debate bills aiming to boost the U.S. as a global crypto hub.
In energy markets, U.S. crude oil fell 31 cents to $66.67 per barrel. Brent crude declined 25 cents to $68.96.
Currency trading showed the U.S. dollar weakening slightly against the Japanese yen, moving from 147.72 to 147.59 yen. The euro gained to $1.1676 from $1.1666.
