Dollar remains firm, Asian stocks mixed as traders ponder tariff outlook

The dollar traded close to a 2-1/2-week high versus major peers on Wednesday while copper hit an all-time peak overnight after US President Donald Trump broadened his global trade war by threatening a 50 per cent tariff on the metal.

Trump also said levies on semiconductors and pharmaceuticals were coming soon, weighing on Wall Street on Tuesday, with futures indicating further weakness there on Wednesday.

However, stock markets around the Asia-Pacific were mixed, as investors digested Trump's latest, shifting trade salvos. Japan and South Korea are among major US trading partners in the region facing an August 1 deadline to reach a trade deal or be subjected to new tariff rates, although Trump has sent mixed signals on how flexible that date is. 

On Monday, Trump said it was "firm, but not 100 per cent firm," reinforcing the view among some in markets that the deadlines are a negotiating tactic that the US president will ultimately back away from. On Tuesday though, Trump appeared to harden his stance by saying, "No extensions will be granted."

Japan's Nikkei edged down 0.2 per cent, shedding early small gains. Australia's stock index declined 0.4 per cent, and Hong Kong's Hang Seng lost 0.9 per cent.

At the same time, mainland Chinese blue chips rose 0.2 per cent, and South Korea's KOSPI climbed 0.5 per cent.

US S&P 500 futures eased 0.1 per cent, following a 0.1 per cent loss for the cash index on Tuesday that extended the 0.8 per cent drop that started the week. 

"The delay in the imposition of new tariffs on some of the US 's major trading partners to August 1 has simultaneously kicked the proverbial can down the road and supported the notion that the loftier tariff rates are a negotiating ploy," Kyle Rodda, senior financial markets analyst at Capital.com, wrote in a note.

"As a result, the markets have been left hanging, and waiting for a stronger catalyst to drive the next move."

Trump said on Tuesday that trade talks have been going well with the European Union and China, though he added he is only days away from sending a tariff letter to the EU.

Only two US agreements, with Britain and Vietnam, have been reached since Trump's April 2 "Liberation Day" reciprocal tariffs' announcement roiled markets. In June, Washington and China agreed on a framework covering tariff rates.

Metals, Currencies

US copper futures jumped by more than 10 per cent to a record high after Trump threatened new duties on the metal that is critical to electric vehicles, military hardware, the power grid and many consumer goods. They would join duties already in place for steel, aluminium and automobile imports.

By contrast, copper futures in London and Shanghai fell on Wednesday, as traders may not have sufficient time to ship much to the United States following Trump's sudden tariff announcement.

Trump also threatened 200 per cent tariffs on drug imports, which he said could be delayed by about a year.

The US dollar continued its recent run of strength on Wednesday, pushing to the highest since June 20 at 147.02 Japanese yen.

The dollar index, which measures the currency against the yen and five other major rivals, edged up to 97.573, after touching the highest since June 25 on Tuesday at 97.837.

The euro was steady at $1.1720, and sterling was flat at $1.3585.

Gold found a floor at $3,301 per ounce, after slumping more than 1 per cent on Tuesday.

Oil prices edged back from Tuesday's two-week highs. Brent crude futures were down 20 cents at $69.95 a barrel, and US West Texas Intermediate crude fell 21 cents to $68.12 a barrel.