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Futures pointed to a tech stock rally when global markets opened in Asia on Monday for the first time since the US spared smartphones and other consumer electronics from the harshest tariffs against China.
Futures tracking the tech-heavy US Nasdaq 100 index rose 1.4 per cent, even as the Trump administration signalled there could still be levies on these goods in the months ahead. Contracts following Wall Street’s blue-chip S&P 500 index advanced 1 per cent. Trading volume early in the Asian morning is typically thin, which can exacerbate price swings.
Traders predicted further volatility as US earnings season begins in earnest this week, with dozens of public companies preparing to report figures and guidance for the rest of the year after a weekend when executives struggled to discern the Trump administration’s plans.
A notice from Customs and Border Patrol on Friday night showed that smartphones would be exempted from the 125 per cent “reciprocal” tariff imposed on Chinese goods last week, but President Donald Trump said on Sunday that they would be included in a broader review of “the whole electronics supply chain”.
His commerce secretary, Howard Lutnick, said of the excluded items that “they’re included in the semiconductor tariffs, which are coming in probably a month or two”.
“I haven’t seen anyone be able to tell me exactly what tariffs are on what any more,” said Peter Tchir, head of macro strategy at Academy Securities, adding that he would be suspicious of a big relief rally, likening it to market bounces during the Eurozone debt and global financial crises.
“Policy comes out that the market has been hoping for and you get a rally, but then everyone realises that we have got bigger problems,” he said.
Markets have endured the most volatile trading since the onset of Covid-19 in the week and a half since Trump announced a 10 per cent tariff on most goods from countries around the world and much higher levies on the biggest sources of imports to the US. Those extra levies were paused for most countries last Wednesday after being in place just 13 hours, prompting the largest single-day rise in the S&P 500 since 2008, but Trump also raised the so-called reciprocal tariff on Chinese goods to 125 per cent.
Tech companies whose supply chains are heavily exposed to China have seen some of the wildest swings. Apple, maker of the iPhone, lost a quarter of its value, almost $775bn, before regaining half the losses.
Friday’s list of exclusions sent companies racing to update models on the likely impact, said Mike Hall, managing director at consulting group Alvarez & Marsal, but while investors may get more transparency on supply chains in earnings calls, executives will be cautious about making predictions.
“At the management level it is day-to-day,” Hall said. “There’s about 150 companies going into investor calls over the next couple of weeks in the S&P 500, and they’re all going to be asked same question: what do you know as of today, and what’s the impact? Clarity is what your investors are seeking.”
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