Stocks in the Middle East and Asia bounced back on Tuesday, gaining some lost ground after historic losses a day earlier, with Japan leading the pack on hopes that Washington might engage in direct talks to negotiate some of its highest tariffs.
Most equity markets in the Middle East rebounded, tracking gains in Asian stocks, as investors watch out for clarity on how the US trade policies will pan out and as governments elsewhere craft strategies to deal with the trade war between the US and China, the world's two biggest economies.
Saudi Arabia’s benchmark Tadawul Index closed nearly 1 per cent higher on Tuesday, led by Zamil Industries' 9.92 per cent gain.
In the UAE, the Dubai Financial Market General Index closed 1.9 per cent higher, with blue-chip developer Emaar Properties increasing 1.29 per cent and Talabat gaining 4 per cent. The Abu Dhabi Securities General Index was up 0.44 per cent at close.
Bourses in Kuwait and Bahrain ended the day 3 per cent and 2.4 per cent higher, respectively, while Qatar Stock Exchange closed up 1.34 per cent.
The regional bourse gains come after a deepening global markets rout on Monday, fuelled by fears of an international trade war and a global economic recession.
Tokyo’s Nikkei index, which slumped more than 7 per cent on Monday, rose by six per cent at 2.30pm UAE time, far outpacing other regional equity benchmarks. South Korea's Kospi, which lost 5.57 per cent a day earlier, also rose by 0.26 per cent, while Australia’s S&P/ASX 200, which had tumbled 4.23 per cent, advanced 2.27 per cent.
The two biggest losers of tariff-driven disruption on Monday – Hong Kong's Hang Seng index, that plunged 13.55 per cent, and China's Shanghai Composite Index, which lost 7.34 per cent – also advanced by 1.51 per cent and 1.58 per cent, respectively. India’s BSE Sensex Index gained 1.49 per cent amid a broad rally in Asian markets.
Stocks in Taiwan, however, extended losses, dropping another 4 per cent, following its worst day yet on Monday, when it slumped 10 per cent. Semiconductors, one of its biggest exports, face a 32 per cent levy from Washington.
Oil prices, a catalyst for the Gulf's financial markets, stayed steady on Tuesday. Brent, the benchmark for two thirds of the world’s oil, was up 0.28 per cent to $64.39 a barrel at 3.40pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was trading up 0.40 per cent at $60.94 a barrel.
Recovery in Asia follows volatile trading sessions in Europe and Wall Street on Monday on a headline-driven trading day which whipsawed markets. More than $10 trillion has been wiped off global equities after US President Donald Trump last week unveiled his tariff agenda to the world, which has drawn criticism and retaliation from the world’s second-biggest economy, China.
The fears of a prolonged war of retaliatory tariffs between the world’s biggest economies, which could lead to a global trade war and dent economic growth, have spooked investors. Analysts are now predicting that the impending trade war will push the global economy into a recession.
Though there are some signs that Washington is willing to hold direct negotiations on tariffs with countries including Japan, volatility in equity markets is not expected to ebb.
“It’s too early to say that we have turned the corner, particularly with Trump still floating the idea of additional tariffs on China,” Bloomberg quoted Tim Waterer, chief market analyst at KCM Trade, as saying. “There are lots of moving parts and a recession remains in the equation as a possibility whiles the US continues to play hardball with tariffs.”
Additional China tariff
Mr Trump on Monday threatened to impose a new 50 per cent tariff on China, despite fears that his trade agenda will deliver an economic downturn.
“If China does not withdraw its 34 per cent increase above their already long-term trading abuses by tomorrow, April 8, 2025, the United States will impose additional tariffs on China of 50 per cent, effective April 9,” Mr Trump wrote on social media.
He imposed 34 per cent duty on Chinese imports last week – set to go in effect on Wednesday – as part of a broader tariff announcement that included a universal 10 per cent levy on all countries and harsher penalties for dozens. He has also placed a separate 20 per cent levy on China, related to fentanyl trafficking.
Hours after Mr Trump threatened to impose additional tariffs on China, Beijing pledged to retaliate, vowing to fight tariffs “to the end”.
“The US threat to escalate tariffs against China is a mistake on top of a mistake, which once again exposes the US’s blackmailing nature,” China’s Commerce Ministry said on Tuesday. “If the US insists on its own way, China will fight to the end.”
The ministry also said there were “no winners in a trade war”.
Equity futures
US stocks closed mixed on Monday after sharp falls last week. BlackRock chief executive Larry Fink said stock markets could fall 20 per cent farther as steep US tariffs lead some investors to believe the US economy may already be contracting.
“Most CEOs I talk to would say we are probably in a recession right now,” Reuters quoted Mr Fink as saying at the Economic Club of New York on Monday. The tariffs will lead to higher prices, adding to inflationary pressure.
JP Morgan Chase chief executive Jamie Dimon also warned that without a quick resolution to the tariff chaos, there could be a potentially “disastrous” fragmentation of the nation’s long-term economic alliances.
The US and European equity futures however, rose on Tuesday, indicating positive momentum in markets despite rhetoric from Washington and Beijing.
S&P 500 futures rose 1.32 per cent, Nasdaq 100 futures gained 1.17 per cent, FTSE 100 futures gained 2 per cent and Euro Stoxx 50 futures rose 2.1 per cent.
“We’re facing an avalanche of headlines: who’s ready to negotiate, who’s not, what did Trump say, what did he mean … it’s nearly impossible to predict the next move,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“This morning, futures are in better shape – we are seeing 1 per cent to 2 per cent gains across Europe and the US – but volatility remains too high to inspire much optimism.”
