Asian stock markets mostly showed signs of recovery on Friday, but they are still on pace for significant weekly declines. This comes amid ongoing trade tensions intensified by tariff threats from U.S. President Donald Trump, prompting cautious investors to seek refuge in safer assets. In the region, Thailand and Malaysia saw gains of 1% and 0.2%, respectively, though both countries are set to report weekly declines of 2.6% and 2.5%. Notably, Malaysia is at risk of experiencing its worst weekly performance since September 2022.
Philippine stocks increased by 0.7%, while Taiwanese markets were stable, yet on track for their third consecutive week of losses—a pattern not observed in the past seven months. The elevated trade tensions have contributed to heightened market volatility, diminishing risk appetites among investors. This shift has led many to invest in safe-haven assets, including U.S. treasuries and gold, which recently reached record highs. Trump’s remarks about escalating the trade conflict with additional tariffs have stirred responses from major U.S. trading partners, who are expected to retaliate.
Illiana Jain, an economist at Westpac, noted that reciprocal tariffs could adversely affect economies across Asia by raising prices on essential goods and hindering growth. In Indonesia, stocks dropped by 1.6% on Friday, contributing to a projected weekly decline of 1.4%. The Indonesian government has maintained its budget deficit target at 2.53% of GDP, even amid a 30% decrease in tax revenues observed in the year’s first two months. Meanwhile, regional currencies saw minor gains as the U.S. dollar stabilized.
The Philippine peso increased by 0.3%, while the Thai baht and Indonesian rupiah both experienced similar modest growth. However, the rupiah remains around its five-year low and is currently the weakest currency in emerging Asia for the year. Analysts predict continued pressure on the rupiah due to expectations of a stronger dollar in the coming months. Investors are now awaiting Bank Indonesia’s interest rate decision next week.