Asian Markets Mixed as U.S.-EU Tariff Deal Caps Rates at 15% Nikkei Falls 1% Hang Seng Rises 0.4%

Asian equity markets displayed a mixed performance on Monday as investors reacted to a preliminary U.S.-European Union trade agreement that caps tariffs at 15% on most European goods exported to the U.S., down from the previously threatened 30% [1]. The deal, announced after a meeting between President Donald Trump and European Commission chief Ursula von der Leyen, eased immediate concerns over trade tensions but left lingering uncertainties about its long-term impact. U.S. equity futures surged in response, with the S&P 500 hitting a record for the fifth consecutive session [1], while Asian benchmarks diverged due to regional economic dynamics and ongoing negotiations.

Tokyo’s Nikkei 225 fell 1% to 41,056.81, driven by skepticism over a proposed $550 billion investment fund from Japan to the U.S. [1], while China Hong Kong’s Hang Seng index rose 0.4% to 25,490.45. The Shanghai Composite declined 0.2% to 3,587.25, and South Korea’s Kospi remained flat. Australia’s S&P/ASX 200 gained 0.3%, and India’s Sensex slipped 0.1%, reflecting cautious sentiment [1]. The divergent trends underscored varying regional risk appetites amid the unresolved implications of the trade deal.

The U.S. market’s optimism was fueled by the agreement’s potential to avoid a tariff war, with the Dow Jones Industrial Average closing at 44,901.92, up 0.5% [1]. Analysts noted, however, that markets remain sensitive to ongoing negotiations with China and the Federal Reserve’s policy decisions. The Fed is widely expected to delay rate cuts until September, pending further data on inflation and economic impacts [1]. Gold prices hovered near $3,330 an ounce, and U.S. benchmark crude rose 24 cents to $65.40 per barrel, reflecting mixed signals about global economic stability [1].

While the U.S.-EU pact provided temporary relief, analysts emphasized that broader trade frictions remain unresolved. Trump’s tariff reductions have sparked speculation about the Fed’s response, but the deal’s long-term efficacy will depend on concrete policy frameworks and the resolution of outstanding disputes [3]. Investors are now turning their attention to upcoming trade talks with China and the Philippines, with markets keenly assessing the administration’s ability to balance trade progress with economic stability [3].

The mixed regional market reaction highlights the delicate interplay between optimism over short-term trade developments and skepticism about execution. With key negotiations approaching and central bank policy in flux, investors will continue to weigh risks and opportunities amid evolving geopolitical and economic landscapes.

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[1] [title1] https://thehill.com/homenews/ap/ap-business/ap-asian-shares-are-mixed-after-wall-street-sets-more-records-for-us-stocks/

[2] [title2] https://www.wsj.com/finance/stocks/asian-stocks-mixed-as-investors-await-clarity-about-u-s-eu-trade-deal-2e5da649

[3] [title3] https://www.businesstimes.com.sg/companies-markets/capital-markets-currencies/asia-most-markets-rise-euro-boosted-after-eu-strikes-us-trade-deal