Equities in Asian emerging markets rallied the most in over two years on Thursday, while most currencies firmed, as U.S. President Donald Trump's temporary pause on some of his harshest tariffs triggered a buying spree of beaten-down stocks.
An MSCI gauge of EM Asian stocks leapt 4% in its biggest one-day gain since mid-November 2022. A subset of equities in ASEAN countries jumped 5%, logging its best day since the start of the COVID-19 pandemic. Most regional currencies also appreciated against the U.S. dollar.
Malaysia's ringgit and Indonesia's rupiah rose 0.5%. The rupiah had hit an all-time low on Wednesday.
Trump's abrupt about-face came after his punitive tariffs set off a carnage in global financial markets that sent equities plunging towards bear territory at a breakneck pace, sparked a sell-off in U.S.
Treasuries and erased trillions in value. Singapore's FTSE Straits Times index surged as much as 9% after shedding 15% from a record high in less than two weeks.
Benchmarks in Indonesia, Malaysia and Thailand also jumped about 5%.
Taiwan's stocks soared more than 9%, while South Korea's KOSPI index advanced 6.6%.
In the Philippines, stocks ended 1.2% higher minutes before the central bank slashed its key interest rate by a quarter-point, as widely expected. The Philippine peso remained anchored around 57.3 per dollar.
"The 90-day pause in reciprocal tariffs seems to reduce the likelihood that Emerging Asia is headed for its worst GDP (gross domestic product) outcomes in this highly fluid moment in global economic history," Barclays said in a note.
"But it does not, in our view, mean that the region is out of the woods yet."
Trump's temporary relief excluded China, Southeast Asia's largest trading partner and investment source. He hiked import levies on Asia's biggest economy to 125% after Beijing responded to Trump's initial tariffs with an 84% duty on U.S. goods.
The tit-for-tat moves by the world's two biggest economies have kept traders on the edge of their seats.
"A dial-back in trade antagonism is an aligned interest but unfortunately not imminently assured," said Vishnu Varathan, head of macro research for Asia excluding Japan at Mizuho Bank.
"Instead, the more likely outcome is an extended standoff (in coming weeks), with significant risks of further escalation."
Equities in China rose, while those in Hong Kong advanced around 3%, though China's yuan fell to its weakest since 2007.
Meanwhile, economic ministers of the regional bloc ASEAN said Southeast Asian countries were pressing for dialogue with the United States on trade tariffs and will not impose retaliatory measures. Financial markets in India were closed for a holiday.
HIGHLIGHTS:
** US tariffs may reduce Indonesia growth by up to 0.5%, minister says
** Thailand has prepared stimulus focused on creating jobs, minister says
** Indonesia's 10-year benchmark yield slips to 7.016%
** China ready to work with ASEAN to strengthen trade cooperation - Reuters
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