Asia report: Markets mixed in wake of Trump's Fed criticism

(Sharecast News) - Asia-Pacific markets traded mostly subdued on Tuesday, following a sharp sell-off on Wall Street driven by renewed political pressure on the US Federal Reserve. US president Donald Trump's latest criticism of Fed chair Jerome Powell rattled investors, intensifying concerns over central bank independence and prompting a cautious tone across global markets.

Traders also saw little progress on trade negotiations, further weighing on sentiment.

"On Monday, Wall Street experienced significant selling, with long-term Treasuries joining stocks and the dollar in a steep decline as Trump dismissed Jerome Powell's interest-rate approach, raising concerns among investors already dealing with a global trade conflict," said TickMill market strategy partner Patrick Munnelly.

"Trump's claims that tariff negotiations were progressing did little to stop the downward trend.

"As investors moved away from US securities, safe-haven assets gained value - gold reached a record high of over $3,500 per ounce, and the Swiss franc appreciated by about 1% against the dollar."

Munnelly added that the turmoil extended to the US credit market, noting that in derivatives, the cost of insuring a range of high-grade credit securities against default rose to its highest point in more than a week.

"Three investment-grade companies considered issuing bonds on Monday, but upon assessing the market conditions, two opted to wait, with only American Express moving forward with the offering."

Markets mixed as investors digest Trump's latest Fed attack

In Japan, the Nikkei 225 slipped 0.17% to 34,220.60, with technology and electronics stocks such as Taiyo Yuden, Lasertec, and Rakuten falling sharply.

The broader Topix index managed a modest gain of 0.13% to 2,532.12.

The Japanese yen appreciated 0.34% against the dollar to JPY 140.38, breaking below the key 140 level for the first time since September 2024 as investors sought safety in the currency amid broader market volatility.

Chinese markets posted a mixed session - the Shanghai Composite rose 0.25% to 3,299.76, supported by strong gains in paper and chemical manufacturing stocks including Shandong Huatai Paper Industry and Guizhou Chitianhua, both up over 10%.

However, the Shenzhen Component dipped 0.36% to 9,870.05.

Hong Kong's Hang Seng Index outperformed regional peers, climbing 0.78% to 21,562.32.

Pharmaceutical and technology shares led the gains, with CSPC Pharmaceutical Group and Hansoh Pharmaceutical Group advancing 8.63% and 7.24%, respectively, while Xiaomi rose 5.84%.

In South Korea, the Kospi 100 edged down 0.2% to 2,468.38, pressured by declines in industrial names.

Hyundai Electric Energy slumped 9.75%, while F&F and SKC also recorded notable losses.

Australia's S&P/ASX 200 was virtually flat, dipping 0.03% to 7,816.70.

Consumer and biotech stocks were under pressure, with Zip Co plunging 9.04% and Polynovo falling 6.28%.

Meanwhile, New Zealand's S&P/NZX 50 dropped 2.33% to 11,836.69, marking the region's steepest loss, weighed by declines in Mainfreight and infrastructure investor Infratil.

In currency markets, the dollar was weaker against its antipodean counterparts, with the greenback last down 0.03% on the Aussie to AUD 1.5583, as it reiterated 0.1% from the Kiwi, changing hands at NZD 1.6648.

Oil prices moved higher, with Brent crude futures last up 1.43% on ICE to $67.21 per barrel, while the NYMEX quote for West Texas Intermediate gained 1.54% to $64.05.

Bank of Japan expected to maintain interest rates - Moody's

In central bank news, the Bank of Japan was expected to keep interest rates unchanged at its May policy meeting, amid heightened market volatility and easing inflation pressures, according to Moody's Analytics.

The recent introduction of reciprocal tariffs by Washington earlier this month sparked a sell-off in financial markets, creating an uncertain environment that is likely to deter the central bank from immediate policy changes.

Japan's inflation rose 3.6% year-on-year in March, marking the third consecutive year that price growth has exceeded the central bank's 2% target.

However, the current pace of inflation has softened relative to previous months, supporting a temporary pause in rate hikes.

Despite the anticipated hold in May, the Bank of Japan was not expected to be finished with its tightening cycle.

Moody's highlighted persistent inflation and gradually rising wages as factors that could warrant further policy tightening in the months ahead.

The Japanese yen, while recently strengthening, remained undervalued relative to fundamentals, adding further weight to the case for additional rate increases over time.

Reporting by Josh White for Sharecast.com.