Asia-Pacific markets mostly climb as investors assess a possible thaw in U.S.-China trade war

Asia has the "room to ease monetary policy," said Krishna Srinivasan, Head of Asia & Pacific Department at the International Monetary Fund, as inflation in many countries in the region is at or below target.

In the case of Japan, the IMF forecasts that the country will reach its 2% inflation target by 2027, Srinivasan added.

— Diane Jorolan, Neha Hegde

India markets fell Friday amid a broader rise in the region as tensions between New Delhi and Islamabad rise following a deadly attack in Kashmir that reportedly killed 26 tourists.

The Nifty 50 fell 1.27%, while the BSE Sensex was down 1.35%.

India downgraded its ties with Pakistan following the attack and suspended a water-sharing treaty with the neighboring country. It has reportedly pointed the finger toward Pakistan, which has denied involvement in the attack.

— Lee Ying Shan

South Korea has asked for "calm" and "orderly" discussions with the U.S. on trade issues, as Asia's fourth largest economy reportedly seeks to work out a deal with the U.S. by July to avoid tariffs.

In the so-called "2+2" talks in Washington, D.C. on Thursday, South Korean Finance Minister Choi Sang-mok and Trade, Industry and Energy Minister Ahn Dukgeun met with U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer.

According to South Korean media outlet Yonhap, Choi told reporters that further talks will focus on four categories: tariff-and non-tariff measures; economic security; investment cooperation; and monetary policies.

A readout from South Korea's Ministry of Finance said Choi proposed to seek mutually beneficial solutions for both countries, as well as communicated South Korea's concerns about tariffs, according to a CNBC translation.

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—Lim Hui Jie

China is mulling the suspension of its 125% tariff on certain U.S. goods, Bloomberg reported citing sources familiar with the matter.

The government is considering scrapping the extra duties on items including medical equipment and industrial chemicals such as ethane. Authorities are also reportedly debating scrapping the tariff on aircraft leases.

The offshore yuan strengthened slightly to 7.284 against the greenback.

—Lee Ying Shan

Most Chinese consumers remain pragmatic in their spending decisions amid U.S.-China trade tensions, Goldman Sachs wrote in an April 24 note.

"There appears to be limited direct correlation between Chinese consumer sentiment towards U.S. brands and the U.S.' tariff policy", the investment bank's team said. The report added that based off sales data from select categories like automobiles, mobile phones and sportswear, U.S. brands did not "meaningfully deteriorate."

Boycott news or search volumes initiated by consumers have been far below previous accounts of geopolitical strife, Goldman also observed.

"We believe brand momentum/product cycle play a relatively more important role in market share shift patterns," the economists wrote, adding that brands with higher pricing and lack of innovation tend to be more vulnerable.

—Lee Ying Shan

China is expected to post its April PMI figures next week, which will be the first available factory activity data from the country to evaluate the U.S. tariff shock.

ANZ economists said in a report published Friday that they expect manufacturing and non-manufacturing PMIs to dip to 49.5 and 50.5 respectively. This would compare against March's official purchasing managers' index which came in at 50.5 in March, while non-manufacturing PMI, which covers services and construction, was at 50.8.

"The first order impact brought by the U.S. tariff will likely be on the new export orders, not the broad domestic demand and production," wrote ANZ.

—Lee Ying Shan

Shares of South Korea's shipbuilders rose after the Asian country and the U.S. have agreed to work on a trade package.

HD Hyundai Heavy Industries was up 5.32% after earlier surging over 7% to a record high. Hanhwa Ocean, which has a shipyard in Philadelphia, rose 6.06%, while HD Korea Shipbuilding & Offshore Engineering climbed more than 4%.

U.S. Treasury Secretary Scott Bessent described Thursday's meeting between the U.S. and South Korea as "very successful."

According to a South Korean news outlet Newsis, a Korean minister said that a consensus on shipbuilding cooperation between South Korea and the U.S. has been reached.

—Lee Ying Shan

Japan's benchmark Nikkei 225 and Topix led gains in Asian markets on Friday, climbing 1.73% and 1.43% respectively.

This follows Prime Minister Shigeru Ishiba's unveiling of a package of emergency economic measures to counter the adverse effects of U.S. President Donald Trump's higher tariffs, according to Japanese media outlet Kyodo News.

Kyodo said the package included measures such as corporate financing support and ways to increase domestic consumption. The government also pledged to reduce fuel prices and increase subsidies for energy bills.

Separately, Bank of Japan Governor Kazuo Ueda reportedly said on Thursday that the BOJ will continue to raise interest rates if underlying inflation approaches its 2% inflation target.

The BOJ will also see how the potential economic fallout from higher U.S. tariffs could affect the likelihood of achieving its price goals, which are a prerequisite for further interest rate hikes.

— Lim Hui Jie

Tokyo's core CPI rose 3.4% in April from a year earlier, marking the first time since 2023 that its core CPI, which strips out volatile fresh food costs, rose over 3%.

The reading outpaced Reuters' expectations of a 3.2% climb, and compares against 2.4% in March.

Just last week, Japan's inflation rate in January climbed to 4%, hitting its highest level since January 2023.

The figures were released just before the Bank of Japan's policy meeting scheduled for April 30 to May 1.

—Lee Ying Shan

Stocks rallied on Thursday, notching their third day of gains in a row.

The S&P 500 rallied 2.03%, closing at 5,484.77. The Nasdaq Composite rose 2.74% to settle at 17,166.04. The Dow Jones Industrial Average gained 486.83 points, or 1.23%, finishing at 40,093.40.

— Lisa Kailai Han

In a Thursday note, UBS strategist Sean Simonds wrote that the U.S. is increasingly approaching a recessionary regime.

"Markets pricing rapidly in a 'recessionary' direction," he wrote.

Simonds added that tariff-sensitive stocks are being "aggressively repriced" and are now down 20% relative to the market.

Meanwhile, consumer discretionary stocks could take an even bigger hit going forward.

"Consumer discretionary stocks are typically sensitive to growth slowdowns/recessions and have underperformed recently as the market pushes quickly in this direction. Earnings expectations have also been rapidly revised lower and hedge fund positioning has adjusted significantly," Simonds said. "Our models suggest more consumer discretionary downside momentum (eg. Kohls) and relative outperformance coming from communication services and utilities (eg. Live Nation and Ameren)."

— Lisa Kailai Han

The International Monetary Fund lowered its Asia economic growth forecast to 3.9% in 2025 from a 4.6% forecast made last year.

Uncertainty surrounding trade policy is a major headwind for the region, Krishna Srinivasan, the IMF's Asia and Pacific Department director, told reporters Thursday.

However, Srinivasan noted the central banks in the region have some scope to ease monetary policy that can help protect against some of the damage from trade policy.

— Hakyung Kim