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Welcome to the Bloomberg Daybreak Asia Podcast. I'm Doug Chrisner. 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 and P five hundred tumbled more than four point eight percent. We closed very near session lows. It was the worst single day drop for the S and P since twenty twenty, and in the process this selloff wiped out about two
trillion dollars in market value. We also saw a great deal of dollar weakness, with the Bloomberg Dollar Spot Index down one and a half percent in New York. Trading oil joined in on a selloff in commodities, with WTI falling six point six percent in New York. And in a moment we'll be hearing from Steve Brice. He is the c IO 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, in a paque, 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'spite consolidated, either fresh investors came in as the time zones changed, or right a realization came through
just how potentially damaging this is. And you were saying that the sell off for US 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 the 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 there's an argument to be made if you wanted to raise the average tariff rate in the US to something like twenty five to thirty percent, then just do it and and move on. And you know, that's the the avowed aims of the Trump administration to increase revenue from tariffs and also to push foreigners to bring manufacturing back to the US because otherwise they will 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 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. You know, do you 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 selloff that we had here in the US makes for an unusual setup for what is really the most closely watch data point of the month at being the government's report on employment. So in addition to that, tomorrow we're going to be hearing from FED share J. Powell. Obviously the story on tariff's will make the Fed's job a lot more complicated. It seems a case of either the Fed lower's 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 has the potential to sit where it is while it wastes 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 Asian I'm particularly curious about the Chinese response.
Well, China's response has also been pretty opaque. It's not a little clear exactly what they are going to do. They do have a track record of actually waiting until the tariffs are imposed before they announced their response. Now that means we could be waiting till April nine, because the ten percent on everybody comes in April five, and then the addition tariffs come in on top of that on April nine. So does China renounce some stuff April five and then more on April nine, or just everything
on April nine. We've also got no real clarity on whether a TikTok deal will actually happen. A lot of talk from the US side that one is coming and that that could lead to tariff relief. If that a curse, then that would take China retaliation off the table, you would think. But there's no clarity as to where this. 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 US. 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. Welcome back to the Daybreak Asia Podcast. I'm Doug Prisner. We're seeing further downside from markets in the Asia Pacific. This is after US 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 Brice. 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's now just adjusting to these peak tariffs that we've been seeing 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 likely is, of course, it's going to be a bit of both, and then the openness or willingness of the US administration
to renegotiate these tariffs lower. So I guess everybody realizes this is bad for growth and good for it and picks up inflation. So the question everybody needs to ask is, you know, what are the scenarios from here from a growth perspective? Is President Trump? Is he an idiot or is he being 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 yet it is yes. The question is when does that kick in? So for individual investors, you know, 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 something 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 and P five hundred, we're actually challenging one of the key supports that we highlighted yesterday, so five four hundred, so we just marginally below that at the close last night. Next one is around five to one twenty, so obviously that's a decent way away. So the way we would suggest this is saying, look, you know, we should be diversified across different asset classes,
across geographers in the world as well. But you know, if you look at the US on a standalone basis, you know, averaging to you know, from now down to those sort of levels probably make 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 chat on the Bloomberg terminal we're now referring it 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 are a big challenge, and now that's becoming less of a concern. They still have very strong fundamentals by and large. I think, you know, names affiliated with Elon Musk obviously have different headwinds potentially than some of the other companies. So that's you know, 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 tech set in the US tech sector as well, so that would fit into this mag seven 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 outbook for China stocks?
So, I mean, we do feel that China will probably weaken a little bit in the in the near term. Obviously the tariff effect. You know, they ha been pretty resilient. Obviously, the market's done very well so far this year, so you know, but we would be buying on dips there as well. You know, we believe that the technology sector in particular is an area of key interest for US. You know, obviously the deep Seek revelation still feeding into
a more bullish environment for tech sector. Valuations in the in China are pretty cheap still, so from that perspective, we like their hang sending in decks, you know, buying down you know, maybe three five percent there than we are today, and the same on the tech sector as well for the Hang Seng.
Southeast Asia, Emerging Asia obviously as part of that channel plus one strategy, some of the hardest.
Hits in these tariffs. Do you still see opportunities to use when it comes to in this region.
So we're underweight Asian, so from you know, so we're overweight China, underweight Assien at the moment, and I think that's one of one of the reasons was we felt that the China was probably better prepared for the tariffs than maybe Asian. Obviously that China plus one strategy was a huge boon to the region, but I think that's something that's in the cross hairs of US policy now.
So and you know, obviously the formula being used by the by the US to determine what tariff should be, it's sort of symptomatic of that, and that's why Asian is probably facing significant headwinds at the moment. So yeah, it's it's 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 or so we were at peak tariff's, 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 Chrisner, and this is Bloomberg