Asian stocks staged a recovery on Tuesday, rebounding from 18-month lows as markets caught their breath following a period of intense selling.

Optimism surrounding potential trade negotiations with the US helped to lift sentiment, with US stock futures also pointing higher.

US Treasury yields continued their ascent from six-month lows, while gold prices stabilized near a 2 1/2-week low, and crude oil prices recovered from near four-year lows, as traders cautiously shifted back towards riskier assets from traditional safe havens.

Japan’s Nikkei index led the regional rally, surging 5.6%, significantly outpacing other markets.

This surge comes as Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer have been tasked with leading trade negotiations with Tokyo, fueling hopes for a potential breakthrough.

US business leaders have also begun speaking out about the potential damage to the economy and financial markets that could result from President Donald Trump’s global trade war.

JPMorgan Chase CEO Jamie Dimon, for example, warned on Monday about the risks of inflation and a US economic slowdown.

Trump digs in: vows more tariffs against China

Despite these concerns, Trump has doubled down on his hard-line stance with China, vowing to impose additional 50% levies if Beijing does not withdraw its retaliatory tariffs on the United States.

Beijing responded on Tuesday, stating that it will never accept the “blackmail nature” of US tariff threats, setting the stage for continued trade tensions.

Even so, Hong Kong’s Hang Seng index climbed 1.7% in early trading, while mainland Chinese blue chips added 0.6%, reflecting a degree of resilience in the face of the ongoing trade dispute.

However, the Chinese yuan weakened to 7.36 per dollar in the offshore market, hitting a two-month low.

“Importantly, a little ray of sunshine is starting to emerge that gives hope that the US is genuinely open to trade negotiations, … the most significant being Japan with Treasury Secretary Bessent,” Business Insider report quoted Tapas Strickland, head of market economics at National Australia Bank,

Strickland cautioned, however, that volatility remains extremely elevated, with the “rare event” of the VIX index spiking as high as 60 overnight, highlighting the fragility of market sentiment.

South Korea’s KOSPI added 1.3%, and Australia’s equity benchmark gained 1%, further contributing to the regional rebound.

Taiwan’s equity benchmark, however, sank 3%, following its worst day ever on Monday, when it tumbled 10%.

The major semiconductor producer faces a 32% duty from Washington, raising concerns about its future prospects.

European and US markets eye gains: futures point higher

Pan-European STOXX 50 futures rallied 2.2%, suggesting a positive open for European markets.

U.S. S&P 500 futures rose 0.9%, after the cash index ended a wild session with a 0.2% loss on Monday, highlighting the volatility that has gripped Wall Street.

The market’s whipsawing behavior reflects the conflicting forces at play, as investor sentiment oscillates between optimism about potential trade resolutions and anxiety about Trump’s unpredictable policies.

Wall Street swung between heavy losses and gains throughout the session as investors were whipsawed by tariff headlines.

A media report claiming Trump was considering a 90-day pause in duties for all countries except China briefly turned US stocks positive early in the session, but it was quickly dismissed by the White House as “fake news,” sending the market back into negative territory.

“The signs are there that if the market hears what it wants to hear then risky assets could explode higher,” said Chris Weston, head of research at Pepperstone.

However, Weston cautioned against excessive optimism, arguing that “what played out was more in fitting with a bear market rally and one that traders should look to fade, rather than believing we’ve reached a key inflection point for a sustained trend higher.”

The 10-year Treasury yield rose as much as 6 basis points (bps) to 4.216% on Tuesday, after jumping some 17 bps on Monday as it bounced from six-month lows, reflecting a move away from safe-haven assets.

This upward movement in yields also helped to lift Japanese government bond yields off their own multi-month lows, with the 10-year yield up 12.5 bps to 1.235%.

The US dollar edged lower against a basket of six major peers, but that followed a two-day 1.2% advance from a six-month trough.

The dollar eased 0.06% to 147.70 yen. The euro jumped 0.4% to $1.0944, and sterling climbed 0.3% to $1.2762.

EU seeks a deal: offers ‘zero-for-zero’ tariff plan

The European Commission said on Monday that it had offered a “zero-for-zero” tariff deal to avert a trade war with the United States, as EU ministers agreed to prioritize negotiations while also striking back with 25% tariffs on some US imports, signaling a willingness to defend its interests.

The risk-sensitive Australian dollar added 0.2% to $0.6001.

Gold prices were steady at around $2,985 per ounce, but well back from last Thursday’s record peak at $3,167.57, reached in the immediate aftermath of Trump’s “Liberation Day” tariff announcement.

Crude oil strongly rebounded after it fell to nearly four-year lows on Monday.

Brent futures were up 1.26% at $65.02 per barrel, while US West Texas Intermediate crude futures rose 1.52% to $61.61.

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China has issued a stern warning to the United States, condemning threats to escalate tariffs and pledging to retaliate if Washington follows through.

This uncompromising stance intensifies the ongoing trade war between the world’s two largest economies, dimming hopes for a swift resolution.

“The US threat to escalate tariffs on China is a mistake on top of a mistake, which once again exposes the extortionate nature of the US,” the Chinese Ministry of Commerce said in a strongly worded statement on Tuesday.

If the US insists on its own way, China will fight to the end.

The Chinese response came just hours after US President Donald Trump vowed to slap additional 50% import taxes on China unless it withdraws its retaliatory tariffs against his earlier levies.

This blunt reaction suggests China intends to resist Trump’s pressure, raising the prospect of a protracted and damaging conflict.

“The rhetoric from China is strong. Without Trump backing down investors may need to prepare for trade decoupling between both countries,” said Michelle Lam, greater China economist at Societe Generale SA, highlighting the potential for a significant shift in the global economic landscape.

Yuan weakens, stocks rebound: market volatility continues

China’s onshore yuan fell to its weakest level since 2023 after the Chinese central bank eased its control on the currency, while a gauge of Chinese stocks listed in Hong Kong rose as much as 3.7% after experiencing its worst day since the financial crisis on Monday, as the nation’s state-backed funds vowed to support the market.

This volatility underscores the uncertainty surrounding the trade dispute and its potential impact on the Chinese economy.

Doubling down: Trump’s cumulative tariff impact

Trump’s latest threat would come on top of the 34% “reciprocal” duty set to kick in on April 9, as well as a 20% levy implemented earlier this year, according to a White House official.

This would bring the cumulative tariff announced this year to a staggering 104%, effectively doubling the import price of any good shipped from China to the US, a move that would likely have significant repercussions for both economies.

The Chinese Ministry of Commerce also called for dialogue to resolve disputes in its statement, although Trump on Monday said “all talks with China” about a meeting will be terminated if Beijing doesn’t take action, without specifying what would be required.

The escalation of tensions is dimming the prospect of any imminent leadership call.

Trump hasn’t spoken with Chinese President Xi Jinping since returning to the White House, marking the longest period without communication between a US president and his Chinese counterpart post-inauguration in 20 years, highlighting the strained relationship between the two countries.

Earlier in the week, the Communist Party’s official newspaper published an editorial declaring Beijing is no longer “clinging to illusions” of striking a deal.

Xi has vowed to boost domestic consumption, recognizing that the tariffs are expected to hurt exports, a sector responsible for a third of China’s economic growth last year.

According to Bloomberg, Ding Shuang, chief economist for Greater China & North Asia at Standard Chartered, predicts that China will respond to any new US tariffs with equivalent measures, arguing that any fresh levies from the US will have a limited impact on the Asian nation.

“The marginal effect of raising tariffs further from the existing level of about 65% will shrink,” he said of additional US tariffs.

Most Chinese exports to the US have already been affected. For goods that are not price sensitive, tariffs won’t work no matter how high they go.

US ‘hegemony’: China defends its interests

In response to the latest US move, China’s embassy in Washington asserted that US threats and pressure are “not the right way to engage” with China and that the nation will defend its interests.

“The US hegemonic move in the name of ‘reciprocity’ serves its selfish interests at the expense of other countries’ legitimate interests and puts ‘America first’ over international rules,” embassy spokesman Liu Pengyu said, signaling China’s determination to protect its economic sovereignty.

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Levi Strauss & Co (NYSE: LEVI) shares are gaining after the jeans company said it was leaving its guidance unchanged for the full year.  

But there’s a caveat: its outlook includes “no impact from the proposed tariffs”, which could be a major red flag that warrants pulling out Levi’s stock on the post-earnings strength.

Levi’s relies rather significantly on countries other than the US for manufacturing, which suggests it’s not particularly well-positioned to navigate tariffs and a subsequent trade war that’s emerging.

Despite its post-earnings rally, LEVI is down some 25% versus its year-to-date high at writing.

Levi’s relies heavily on China and Vietnam

Levi’s makes million of products every year in Vietnam and China, both of which have been hit with heavy tariffs under the Trump administration.

Vietnamese imports are now subject to 46% duties in the United States while Chinese imports have been slapped with an additional 34% tariff.

This could prove significant for Levi’s given it currently has 50 factories in Vietnam and another 130 in China.

In fact, the apparel giant no longer manufactures jeans in the US.

It has shifted production to several other countries in pursuit of lower labour costs, including India, Pakistan, and Bangladesh. Versus their 52-week high, Levi’s shares are currently down about 40%.

Tariffs could hurt Levi’s profitability

On the earnings call, Levi’s chief of finance Harmit Singh said the tariffs situation said it was hard to evaluate the potential impact from tariffs as the development is quite unprecedented.

However, it’s reasonable to believe that the effect will likely be significant given “the supply chain for lifestyle brands is entrenched in Asia and not easily relocated,” as per Stifel analyst Jim Duffy.

Duffy does not expect names like Levi’s to attract a lot of investor interest as Trump tariffs could mean a significant hit to their profitability moving forward.  

However, Levi’s shares currently pay a rather lucrative dividend yield of 3.85% that makes them a bit more attractive to own at writing.

Is it worth investing in Levi’s stock

Levi’s continues to see up to $1.50 a share of earnings this year on as much as a 2% sales decline.

For Q1, the NYSE listed firm reported $1.53 billion in revenue on 38 cents of adjusted EPS last night.

Analysts, in comparison, were at $1.54 billion and 28 cents, respectively.

In the press release, chief executive Michelle Gass touted the company’s global footprint, strong margin structure, and agile supply chain position” that she believes positions LEVI well to navigate the challenging environment.

Investors should also note that despite tariffs related headwinds, Wall Street remains bullish on Levi’s stock.

The consensus rating currently sits at “overweight” with the mean target of about $20 indicating potential upside of more than 35% from here.

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The Schwab US Dividend Equity ETF (SCHD) has crashed and moved into a correction in the past few days as jitters on trade escalated. It tumbled to a low of $24 on Monday, its lowest level since February 9. This article explains why it makes sense to buy and hold the SCHD ETF dip.

SCHD dividend yield is rising

The SCHD ETF is a popular fund that investors buy because of its long track record of dividends. It has one of the best track records regarding dividend growth in the stock market. Data shows that the ten-year compounded annual growth rate (CAGR) of the fund in the past decade stands at over 13%.

The benefit of buying the SCHD fund dip is that its dividend yield rises as the stock crashes, offseting some of the losses. For starters, the dividend yield is calculated by dividing the annual dividend per share by the price per share and then multiplying by 100. 

Therefore, if the price per share falls and the annual dividend remains the same, the yield increases. That’s because the dividend yield becomes a larger percentage of the lower share price.

This explains why the dividend yield of the SCHD ETF has continued rising in the past few days as the stock crashed. It now has a yield of about 4.1%, higher than where it was earlier this year when it surged to a record high. 

It also explains why popular stock ETFs like those that track the S&P 500 and Nasdaq 100 indices have a tiny dividend yield.

Exposure to US tariffs

The other reason to buy the SCHD stock dip is that Donald Trump’s tariffs will not substantially affect many companies in the fund. Ideally, the most exposed companies are those that are in the cross-border trading industry. 

The biggest component of the SCHD fund is financials, a sector that is largely immune to these tariffs. The top financials companies in this fund are Fifth Third Bancorp, Cincinnati Financial Corp, Regions Financial, Comerica, and Columbia Banking System.

Trump has not applied any tariffs on services, and many of these companies are domestic ones. Therefore, tariffs in themselves will not affect them. It may affect them if the US goes into a recession, leading to another crisis in the regional banking industry.

These tariffs will not impact the other top SCHD ETF constituents. Verizon, the biggest component, is a telecom company that offers essential services in the US. Customers will not cancel their subscriptions even if the US move into a recession. 

Other top SCHD firms like Coca-Cola, PepsiCo, ConocoPhilips, Chevron, Altria, Amgen, and Bristol Myers Squibb will not be impacted since they offer essential services.

Stocks will recover after the panic

Fear and greed index chart

The other reason to buy the Schwab US Dividend Equity ETF applies to other US stocks as well. Historically, these assets tend to bounce back after the initial panic. For example, they crashed after the COVID-19 pandemic, dot com bubble, the Great Financial Crisis (GFC), and the Great Depression.

Therefore, there is a likelihood that the same will happen this time. That will happen if the Federal Reserve starts cutting interest rates and if the US negotiates with other countries like Japan, China, and the European Union. Remember that Trump views the stock market as the most visible gauge of his performance as the president.

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European equity markets experienced a welcome respite on Tuesday, opening higher after a four-day losing streak had battered investor sentiment worldwide.

The gains, however, come with a strong dose of caution, as the ongoing global tariff dispute and uncertainty surrounding US President Donald Trump’s next move continue to weigh heavily on market confidence.

As of 09:11 CET, the Stoxx 600 index was trading approximately 1% higher, with nearly every sector back in positive territory.

Major regional indexes also saw gains, including Germany’s Dax (up 1.09%), France’s CAC 40 (up 1.66%), and Italy’s FTSE MIB (up 1.66%).

In Spain, the IBEX 35 opened up 0.52%, while in London, the FTSE 100 also returned to positive territory, climbing 1.03%.

This calmer start on European markets follows a brutal trading session on Monday, although investor sentiment remains cautious as the global tariff spat and uncertainty over US President Donald Trump’s next move continues to weigh on confidence.

“Investors need to take each day as it comes, and Tuesday got off to a good start… Crude oil also increased by 1.2% to $61.45 a barrel, while gold edged 1.8% higher to $3,028 per ounce,” noted Russ Mould, investment director at AJ Bell, in an email to Euronews.

These are small wins in terms of asset movements but big wins for the state of the broader market given the bloodbath we’ve endured since ‘Liberation Day’ last week. The stabilising of markets will be welcomed with open arms.

Mould also suggested that these price movements should inject some much-needed positivity into markets, helping investors to alleviate some of the anxiety surrounding the damage to their portfolios over the past week.

“Markets could stay fragile for days and weeks to come. It would only take a new sign of aggression from Trump or a trading partner fighting back hard to cause upset again. Market recoveries can quickly lose momentum if investors lose faith in a remedy to the situation that caused the original sell-off,” Mould cautioned.

Asian markets stage a rebound, but the tension persists

Meanwhile, early Tuesday, China’s Commerce Ministry declared that it would “fight to the end” and implement unspecified countermeasures against the United States to safeguard its own interests after President Donald Trump threatened an additional 50% tariff on Chinese imports.

By early afternoon Tokyo time, the Nikkei 225 was up 5% at 32,691.34, recovering some of its recent losses.

Hong Kong also managed to regain some ground, although not nearly enough to offset Monday’s devastating 13.2% plunge, which marked the Hang Seng’s worst day since the Asian financial crisis of 1997.

The Hang Seng gained 1.6% to 20,140.78, while the Shanghai Composite index jumped 0.9% to 3,124.77.

South Korea’s Kospi edged 0.1% higher to 2,331.80, while the S&P/ASX 200 in Australia climbed 1.7% to 7,471.10.

Markets in New Zealand and Australia also saw gains.

US futures point to gains: a glimmer of hope or a false dawn?

US stock futures also climbed, with the three main benchmarks – the S&P 500, the Dow Jones Industrial Average, and the Nasdaq Composite – all up more than 1%.

This follows a mixed performance in the US session on Monday evening, where the Nasdaq managed a very small gain, while the S&P 500 was only down 0.2%.

However, analysts remain wary, questioning the sustainability of the current rebound. “I wouldn’t exactly be betting the house on a durable bounce, unless and until we get a decisive policy pivot,” Michael Brown, a senior research strategist at Pepperstone, told Euronews.

Inflection point or dead cat bounce? The market’s uncertain future

Richard Hunter, head of markets at Interactive Investor, echoed Brown’s sentiments, noting that investor skittishness and volatility remain high.

“The moves were relatively benign compared to the experience of recent days, but underneath the bonnet there were wild gyrations, with the Dow Jones index posting its largest ever intraday swing. Early reports apparently emanating from social media suggested that a pause on tariffs was imminent, which sent markets higher, only for this to be followed by a swift rebuttal from the White House which reversed any potential gains. Later comments from the President threatening to escalate tariffs even further against China kept global investors on high alert,” Hunter said in an email note to Euronews.

He further noted that the earlier falls in the prices of bonds and gold on the day were, “attributed to investors needing to raise funds for margin calls to cover their losses elsewhere.

This rotation has been seen before and can turn out to be a self-perpetuating cycle and is one which could put further pressure, if it were needed, on markets globally,”

Hunter also emphasized the difficulty in determining whether the reduced market falls represent a genuine inflection point or simply a classic “dead cat bounce.”

“The volatility within the US trading session in particular suggest that either is possible, especially since further tariff announcements will follow which could move sentiment in either direction. Indeed, many investors have noted – with some exasperation – that unlike previous crises where a confluence of factors came together to cause extreme market weakness, this set of events is largely due to the actions of just one person. To some extent, global indices are at the mercy of the President, and the growing backlash which the US is beginning to experience in terms of retaliatory tariffs and increasingly aggressive rhetoric are not even near the end of the beginning,” he cautioned.

Finally, despite finishing marginally higher on the day, the Nasdaq remains down by 19.2% so far this year and firmly in bear market territory with a decline of 23% since its relatively recent record high, further evidence the recovery may be short-lived.

Meanwhile, the S&P 500 and Dow Jones have fallen by 14% and 10.8% respectively in the year to date.

Global impact: commodities and trade relations under pressure

The analyst highlighted the ongoing reliance that Asian markets have on talks with the US to progress successfully stating, “the rally seems to be based on hopes that the talks with the US over the coming days will result in some concessions, with the economy largely dependent on exports with the States being a major and important trade partner.”

He also added, “China also ramped up its own retaliatory rhetoric and is showing little sign of succumbing to the President’s threats. It has promised its own as yet unspecified countermeasures in addition to the tariffs already announced, alongside which there is the possibility of further state stimulus to underpin the domestic economy. In any event, the outcome as it stands will be ugly and the potential for reduced demand has hit commodity prices in general, with the likes of oil already having declined by 13% this year.”

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