Asia Open: Cautious optimism into new week, with tariff headlines eyed

US tariff headlines bring some calm for now

The new week began on a calmer note, with US equity futures inching higher and looking to extend their corrective bounce amid hopes that US tariffs may be less severe than initially feared. The 2 April timeline continues to be the closely watched – deemed by US President Trump as the “Liberation Day in America” when sweeping trade levies were set to be announced. However, optimism has surfaced that Trump’s tariff plans may once again be more bark than bite, with potential exemptions for certain countries and a more targeted approach rather than broad-based measures.

In recent days, Trump administration officials have signalled that the list of affected countries may not be universal, and existing tariffs—such as those on steel—may not necessarily be cumulative. This could significantly reduce the overall impact on specific sectors. While the details remain crucial and any trade restrictions will undoubtedly have implications for global growth, the prospect of a more measured approach is offering a sense of cautious optimism in global markets for now.

S&P 500 looking to extend corrective bounce

While there is the prospect for the recent corrective bounce to extend, the break below its 200-day moving average (MA) remains significant, where resistance may be expected around the 5,825 level. We may remain wary of the risks for the formation of a new higher low ahead, which could signal a continuation of the broader downtrend. But for now, the bias seems to point to short-term upside as the four-hour relative strength index (RSI) continues to hold above its midline, suggesting buyers in near-term control.

Look-ahead: Flash manufacturing and services PMI

Today's focus will be on a series of flash manufacturing and services Purchasing Managers' Index (PMI) releases, with broad improvement expected across major economies compared to the previous month. In the US, the services PMI is projected to edge up slightly to 51.2 from 51.0, while manufacturing activity may slow to 51.9 from 52.7. A resilient set of data may be encouraging by helping to ease recent recession jitters, but its eventual market impact may be short-lived, as focus will likely be centred around tariff developments, which are likely to play a more decisive role in shaping market direction by influencing the broader growth outlook.

Asia Open: Gold prices roll over, Chinese equities in focus ahead

The Asian session is off to a flat start, with the Nikkei up 0.2%, the ASX nearly unchanged at +0.01%, and the KOSPI down 0.2% at the time of writing. The economic calendar is relatively quiet to begin the week, leaving Asian indices likely to drift cautiously as markets await further details on US reciprocal tariff headlines, which will have a significant impact on sentiments around the trade-dependent region.

Meanwhile, the US dollar is stabilising after last month’s sharp sell-off, exerting some slight pressure on gold prices. Gold’s rally may warrant a brief pause given overbought technical conditions, while a broad upper-channel resistance currently serves as a hurdle. Further moderation is possible as the daily RSI reverts to more neutral levels, but attention will be on potential support for a new higher low. Gold remains an attractive hedge against geopolitical and economic risks, particularly as the ongoing tariff negotiations carry the risk of further escalation before any resolution emerges.

Chinese equities will remain on close watch into the new week, given the recent unwinding over the past week on profit-taking. The next leg of rally may depend on whether economic conditions can find room for recovery ahead to validate current market views that the worst is over. In the near term, however, tariff risks present a key headwind, with China squarely in the US crosshairs. This may see more caution creeping back in as we head into the 2 April timeline next week, as with market participants manage their exposure while awaiting further clarity.

On the four-hour chart, a breakdown of an upward trendline may be significant in pointing to the risks of a near-term trend shift to the downside. A double-top formation points to exhaustion for the buyers for now, with immediate resistance at the 5,710 level.