Asian Stocks Rebound as Markets Brace for U.S. Tariffs; RBA Holds Rates Steady

Asian stocks rebounded on Tuesday, tracking overnight gains on Wall Street, as investors adopted a cautious stance ahead of the April 2 U.S. reciprocal tariffs. Meanwhile, the Reserve Bank of Australia (RBA) kept interest rates unchanged, in line with market expectations.

U.S. Market Gains Support Asian Rebound

Major U.S. stock indices closed higher on Monday, buoying sentiment in Asian markets. However, futures tied to these indices slipped during early Asian trading hours on Tuesday, reflecting investor caution over impending U.S. trade tariffs.

RBA Maintains Rates at 4.10%

The Reserve Bank of Australia (RBA) decided to hold its official cash rate at 4.10%, a widely anticipated move. This decision follows a 25 basis point rate cut in February, marking the first reduction since late 2020.

The RBA's cautious stance reflects a complex economic backdrop influenced by an ongoing federal election campaign and concerns over U.S. trade policies. Australia's S&P/ASX 200 index rose 0.8% before the announcement and remained largely unchanged post-decision.

In domestic economic data, February retail sales figures came in below expectations, suggesting continued pressure on household spending.

Trump's Tariff Plan Looms Over Markets

President Donald Trump is set to impose reciprocal tariffs on April 2, targeting a broad range of trading partners without exemptions. This initiative, known as "Liberation Day", will be followed by a 25% tariff on auto imports starting April 3.

U.S. Treasury Secretary Scott Bessent confirmed in a Fox News interview on Monday that Trump will unveil the full details of the trade tariffs on April 2 at 15:00 ET (19:00 GMT).

Market Reactions and Investor Sentiment

Investor concerns center on potential demand slowdowns in the U.S., the world's largest economy, and the risk of a global growth downturn. However, Asian markets found some relief in dip-buying activity and short-covering ahead of Trump's announcement.

• Japan's Nikkei 225 gained 0.7%, while the TOPIX index climbed 0.8%.

• South Korea's KOSPI led regional gains with a 1.9% jump, despite export figures for March coming in below expectations.

• Indonesia's Jakarta Composite Index advanced 0.6%, and Thailand's SET Index rose 1%.

• India's Nifty 50 futures remained largely unchanged.

China Stocks Up as Manufacturing PMI Hits 4-Month High

China's stock market also saw gains, driven by positive economic data:

• The Shanghai Composite rose 0.6%.

• The Shanghai Shenzhen CSI 300 index climbed 0.3%.

• Hong Kong's Hang Seng index jumped 1.3%.

A key driver was the latest Caixin Manufacturing PMI, which rose to 51.2 in March, beating expectations of 50.6 and exceeding February's 50.8. This marked the highest level in four months, signaling steady expansion in China's manufacturing activity.

Outlook: Trade Policy Uncertainty to Drive Market Sentiment

While Tuesday's rally provided a temporary boost to Asian equities, uncertainty surrounding U.S. trade policy remains a key risk factor. Market participants will be closely watching the April 2 tariff announcement for further signals on the trajectory of global trade relations.