- Asian stocks slipped as investors reacted to a U.S. court ruling limiting some Trump-era tariffs.
- Tokyo inflation rose to 3.6% in May, fueling rate-hike speculation in Japan.
- U.S. markets edged higher, led by Nvidia’s strong performance amid AI optimism.
A U.S. court’s recent decision to block parts of former President Donald Trump’s tariff regime initially boosted optimism in global markets.
Meanwhile, Japan reported a higher-than-expected inflation rate in Tokyo, with core prices rising 3.6% in May. This has intensified speculation that the Bank of Japan may soon raise interest rates — a move that would signal a historic shift from its ultra-loose monetary policy.
Tariff Tensions and Inflation Fears Shake Asian Stocks
Asian stock markets largely declined on Friday, with sharp losses in Tokyo and Hong Kong as investors reassessed the impact of a recent U.S. court ruling on global trade. Although the decision curbs some of the tariff powers used during Trump’s presidency, other levies — including those on steel and autos — remain unaffected.
The ruling temporarily reduced fears that aggressive trade policies could drag down the global economy. However, the continued imposition of tariffs while legal appeals play out has created a fog of uncertainty, with businesses and consumers still exposed to elevated import costs.
In Japan, surging core inflation in Tokyo stirred fresh expectations that the Bank of Japan may end its long-standing dovish stance. A 3.6% increase in May’s core CPI, excluding fresh food, surpassed forecasts and raised concerns about potential monetary tightening, leading to a 1.1% drop in the Nikkei 225.
Meanwhile, U.S. markets moved in the opposite direction, with all major indexes gaining ground. Nvidia’s strong earnings, driven by AI sector demand, led tech stocks higher. The Nasdaq and S&P 500 both rose 0.4%, showing continued investor appetite for growth sectors despite macroeconomic headwinds.
Global investors are navigating a complex landscape where inflation fears, trade tensions, and central bank policies collide. As legal and economic uncertainties mount, markets are likely to remain volatile in the near term.
“Uncertainty is the only certainty there is.” – John Allen Paulos
