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Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Krisner. So markets in Asia are wrapping up what certainly has been a very rough week. And obviously the key driver, President Trump's latest tariff measures. Here in the States, we had a meltdown in risk assets. The S&P 500 tumbled more than 4.8%. We closed very near session lows. It was the worst single day drop for the S&P since 2020.
And in the process, this sell-off wiped out about $2 trillion in market value. We also saw a great deal of dollar weakness with the Bloomberg Dollar Spot Index down 1.5% in New York trading. Oil joined in on a sell-off in commodities with WTI falling 6%.
6.6% in New York. And in a moment, we'll be hearing from Steve Bryce. He is the CIO at Standard Chartered Wealth Solutions Group. But we begin this morning in Sydney. Joining me now is Garfield Reynolds, who leads Bloomberg's Markets Live coverage for the Asia-Pacific. Garfield joining from our studios in Sydney. Talk to me a little bit about what you witnessed yesterday, Garfield, with the price action across the Asia-Pacific and what we're seeing now in early trading.
Yeah, the price action in Asia yesterday was extraordinary, but it was fed by an announcement that was confusing and opaque in the presentation, in the methodology, which ultimately ended up being based on a very simplistic and not really credible on an economic basis formula. So,
you just sort of had waves of reaction every time you thought maybe the market spike consolidated. Either fresh investors came in as the time zones changed or a greater realization came through at just how potentially damaging this is. And you were saying that the sell-off for U.S. stocks was the biggest since the pandemic.
as it should have been given that this is the biggest shock to the global economy since the pandemic. And the question now is whether or not it precipitates a recession. Was it very interesting today that President Trump said he's open to reducing these tariffs if...
Other nations were willing to offer something, and I think the word he used here was phenomenal. That says to me that there is room to negotiate, but we may have to accept the fact that in that process that could be quite lengthy, tariffs may be in place for a while. Is that fair?
Yeah, that's fair. And it actually adds to, yeah, there's an argument to be made that if you wanted to raise the average tariff rate in the US to something like 25 to 30%, then just do it and move on. And that's the avowed aims of the Trump administration to raise
revenue from tariffs and also to push foreigners to bring manufacturing back to the US because otherwise they'll be priced out of the US market. If you think that's the way to go, then you do big tariffs and you stick with them for at least a while. Maybe you give a timetable. You say these are going to be in for a year. But instead, we have a situation where nobody knows what
how long these tariffs will be in for, what they will actually entail. So for businesses, you've got a lot of pain, but also a lot of clarity. And for most companies, it'll be okay. I'm going to punt my business plans for what, six months, a year, until I can be sure what I'm dealing with.
So the sell-off that we had here in the U.S. makes for an unusual setup for what is really the most closely watched data point of the month, that being the government's report on employment. So in addition to that, tomorrow we're going to be hearing from Fed Chair Jay Powell.
Obviously, the story on tariffs will make the Fed's job a lot more complicated. It seems a case of either the Fed lowers interest rates to support the economy or it keeps them elevated to contain inflation. Where do you see the greater risk right now, economic weakness or stubborn inflation, or are they kind of evenly balanced? Well, I think economic weakness is the greater risk, but part of the risks there are precisely that the Fed is
has the potential to sit where it is while it waits to see what happens. There's definitely an increase in inflation expectations. They were already concerned that there were signs that this inflationary trend was stalling out. They had been
talking about the idea that interest rates now are in a good place and they don't see any reason to rush to change them. And when you've got this, as I said, very confusing introduction of tariffs that could have major impacts on the US economy, you're going to have a lot of volatility about the data coming in and uncertainty about all sorts of data and what the long-term impacts are actually going to be.
In terms of retaliation, what do we know about what we're hearing from governments in Asia? I'm particularly curious about the Chinese response. Well, China's response has also been pretty opaque. It's not at all clear what
exactly what they are going to do. They do have a track record of actually waiting until the tariffs are imposed before they announce their response. Now, that means we could be waiting till April 9 because the 10% on everybody comes in April 5 and then the additional tariffs come in on top of that on April 9. So does China announce some stuff April 5 and then more on April 9 or just everything on April 9?
We've also got no real clarity on whether a TikTok deal will actually happen. A lot of talk from the U.S. side that one is coming and that that could lead to tariff relief. If that occurs, then that would take China retaliation off the table, you would think.
But there's no clarity as to whether we don't really have much of a clue as to whether China is really interested in letting TikTok essentially slip out of its hands. Yeah, I think that TikTok deadline is this weekend here in the U.S. Garfield, thank you so much for taking the time to chat with us. Garfield Reynolds there. He leads Bloomberg's Markets Live coverage for the Asia-Pacific. And Garfield joining today from our studios in Sydney here on the Daybreak Asia podcast.
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where money means more. Welcome back to the Daybreak Asia podcast. I'm Doug Krisner. We're seeing further downside for markets in the Asia Pacific. This is after U.S. equities and the dollar suffered their worst day in years. Shares in Australia and Japan fell right at the open. For some market perspective, we heard earlier from Steve Bryce. He is the CIO at Standard Chartered Wealth Solutions Group. He spoke with Bloomberg's Paul Allen and Heidi Stroud-Watts.
So it doesn't feel like we're going to see the volatility abate anytime soon. How do you sort of progress from here? What's your take on how to navigate these markets?
Yes, I guess everybody is now just adjusting to these peak tariffs that we've seen implemented in the US and just trying to figure out what the next steps are, whether it's going to be retaliatory or whether we're going to see some sort of negotiations taking place. The likelihood is, of course, it's going to be a bit of both.
and then the openness or willingness of the U.S. administration to renegotiate these tariffs lower. So I guess everybody realizes this is bad for growth and picks up inflation. So the question everybody needs to ask is, what are the scenarios from here from a growth perspective? Is President Trump...
Is he an idiot or is he unconstrained? I don't believe he's either of those things. So, you know, he's clearly using this or most likely using this as a negotiating tool to try and get a better trade agreements with different different counterparties.
And we're also seeing in Congress the Republicans have a voice again. So, it's certainly not a majority questioning his leadership, but certain people now started asking the question as to whether this is the appropriate thing. And that leads to the point of do we still have a Trump put? And we believe the answer to that is yes. The question is when does that kick in?
So for individual investors, with a long-term time horizon, this is where you make your money. You buy on weakness. Whether we'll see further downside, we still think we might see some further downside in the short term. But these are the great opportunities when markets go on sale for people to build long-term wealth. Where are you buying the dip then if you were in that scenario?
So for the S&P 500, we're actually challenging one of the key supports that we highlighted yesterday, so 5,400, so we're just marginally below that.
at the close last night. Next one is around 5.120. So obviously that's a decent way away. So the way we would suggest this is saying, look, we should be diversified across different asset classes, across geographies in the world as well. But if you look at the US on a standalone basis, averaging from now down to those sort of levels probably makes sense, assuming we're right that that trump put is still there.
I want to take a look at the Magnificent Seven, although in this chart on the Bloomberg Terminal we're now referring to it as the Lag Seven. But there's some really quality names here in bear market territory. Now if you're willing to take a long term view, is this the moment to get in?
So certainly, I mean, you know, obviously we've seen valuations come off quite dramatically. So that was always the concern with these names was that valuations are a big challenge. And now that's becoming less of a concern. They still have very strong fundamentals by and large.
I think names affiliated with Elon Musk obviously have different headwinds potentially than some of the other companies. So that's something that you have to factor into your decision-making process. But from our perspective, we are overweight tech looking to buy the dip in the U.S. tech sector as well. So that would fit into this MAG7 rebound at some point.
You're also overweight China. Now the market there is closed today, but we saw some pretty modest declines yesterday compared to what we saw in the US. What's your outlook for China stocks?
So, I mean, we do feel that China will probably weaken a little bit in the near term. Obviously, the tariff effect, they have been pretty resilient. Obviously, the market's done very well so far this year. So, we would be buying on dips there as well. We believe that the technology sector in particular is an area of key interest for us. Obviously, the deep-seek
Revelation still feeding into the more bullish environment for tech sector. Valuations in China are pretty cheap still. So from that perspective, we like the Hang Seng index buying down maybe 3-5% lower than we are today and the same on the tech sector as well for the Hang Seng. Southeast Asia, emerging Asia obviously is part of that China plus one strategy, some of the hardest hit in these tariffs. Do you still see opportunities when it comes to EM in this region?
So we're underweight ASEAN. So we're overweight China, underweight ASEAN at the moment. And I think that's one of the reasons was we felt that China was probably better prepared for the tariffs than maybe ASEAN. Obviously, that China plus one strategy was a huge boon to the region. But I think that's something that's in the crosshairs of U.S. policy now. So obviously, the formula being used by the U.S. to determine what tariffs should be
sort of symptomatic of that and that's why ASEAN is probably facing significant headwinds at the moment. So yeah it's not an area of focus for us. Obviously value will be created through this in our opinion if we think that tariffs are going to be transitory or at least not at these levels. So we were at peak tariffs but for us our focus is elsewhere.
That was Steve Bryce, Chief Investment Officer at Standard Chartered Wealth Management, speaking earlier with Bloomberg's Paul Allen and Heidi Stroud-Watts here on the Daybreak Asia podcast.
Thanks for listening to today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at the story shaping markets, finance, and geopolitics in the Asia Pacific. You can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere else you listen. Join us again tomorrow for insight on the market moves from Hong Kong to Singapore and Australia. I'm Doug Krisner, and this is Bloomberg.
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