Stocks rise as stability returns, autos surge on exemption hope

HONG KONG — Equities mostly rose Tuesday as some stability returned to markets after last week's rollercoaster ride, with auto firms boosted by Donald Trump's possible compromise over steep tariffs on the sector.

However, the US president's unorthodox approach to trade diplomacy continues to fuel uncertainty among investors, with speculation over new levies on high-end technology and pharmaceuticals dampening sentiment.

The announcement last week of exemptions for smartphones, laptops, semiconductors and other electronics -- all key Chinese-made products -- provided a little comfort, though Trump's suggestion they would be temporary tempered the optimism.

Traders gave a muted reaction to Treasury Secretary Scott Bessent's remarks Monday that a China-US deal could be done in an apparent olive branch as the two economic powerhouses trade tariff threats.

His comments came as Trump has hammered China with duties of up to 145 per cent, while Beijing has imposed retaliatory measures of 125 per cent.

"There's a big deal to be done at some point", Bessent said when asked by Bloomberg TV about the possibility that the world's largest economies would decouple. "There doesn't have to be" decoupling, he said, "but there could be".

Meanwhile, Trump aide Kevin Hassett said the White House had received "more than 10 deals where there's very, very good, amazing offers made to us", but did not specify from which countries they came.

After a broadly positive day on Wall Street, Asian markets pushed higher.

Tokyo, Seoul, Hong Kong, Shanghai, Sydney, Singapore, Taipei, Mumbai, Manila and Jakarta all rallied, with London and Frankfurt also climbing but Paris edged down.

The gains were boosted by a rally in autos after Trump said he was "very flexible" and "looking at something to help some of the car companies" hit by his 25 per cent tariff on all imports.

In Asia, Toyota jumped 3.7 per cent and Hyundai jumped more than four per cent, while in Europe Stellantis -- maker of Peugeot, Jeep and Fiat -- surged five per cent in Milan and Volkswagen piled on close to three per cent.

And South Korea's announcement of plans to invest an additional $4.9 billion in the country's semiconductor sector gave a little lift to chip giants Samsung and SK hynix.

Federal Reserve governor Christopher Waller provided some support to markets after suggesting he would back the central bank to cut interest rates to help the economy, instead of focusing on higher inflation.

He pointed out that prices could see a transitory rise because of the tariffs but added that if Trump reverted to the crippling tariffs included in his "Liberation Day" on April 2 then officials would be ready to step in.

"If the slowdown is significant and even threatens a recession, then I would expect to favour cutting the... policy rate sooner, and to a greater extent than I had previously thought," he said in comments prepared for an event Monday.

"In my February speech, I referred to this as the world of 'bad news' rate cuts. With a rapidly slowing economy, even if inflation is running well above two per cent, I expect the risk of recession would outweigh the risk of escalating inflation, especially if the effects of tariffs in raising inflation are expected to be short lived."

However, OANDA senior market analyst Kelvin Wong warned central bankers would face some tough choices.

"Combination of slowing growth and persistent inflation, hallmarks of a stagflation environment, poses a significant challenge for the US Federal Reserve, which may find it increasingly difficult to implement counter-cyclical monetary policies to support the economy," he said in a commentary.

Key figures around 0810 GMT -

Tokyo - Nikkei 225: UP 0.8 per cent at 34,267.54 (close)

Hong Kong - Hang Seng Index: UP 0.2 per cent at 21,466.27 (close)

Shanghai - Composite: UP 0.2 per cent at 3,267.66 (close)

London - FTSE 100: UP 0.7 per cent at 8,192.85

Dollar/yen: UP at 143.40 yen from 143.09 yen on Monday

Euro/dollar: DOWN at $1.1349 from $1.1356

Pound/dollar: UP at $1.3217 from $1.3189

Euro/pound: DOWN at 85.88 pence from 86.08 pence

West Texas Intermediate: UP 0.6 per cent at $61.89 per barrel

Brent North Sea Crude: UP 0.5 per cent at $65.21 per barrel

New York - Dow: UP 0.8 per cent at 40,524.79 (close)