Asian stocks retrace early losses as trade war escalates on new tariff threats; S&P 500 in correction zone

US equity-index futures climbed Friday as signs the US will avoid a government shutdown injected a boost to sentiment.

Shares in Japan retraced early losses while those in Australia also climbed higher along with indexes in Hong Kong. Futures contracts for US equities advanced early Friday as a stopgap funding bill looked set to pass and avoid a US government shutdown. The S&P 500 dropped 1.4% on Thursday to a six-month low, bringing its three-week rout past 10% — a correction in trader parlance. The Nasdaq 100, also in a correction, fell 1.9%.

Treasuries were steady Friday after rallying in the prior session during a dash to haven assets that lifted gold rose to a record and supported an index of the dollar, which gained for a third consecutive day.


Avoiding the government close down removes an uncertainty for the markets, already nervous about economic growth in the US due to the tariff war of President Donald Trump. Two months into his presidency, sentiment in Wall Street has turned from optimism to one of nervousness with $5 trillion getting erased in the US equity benchmark with investors paring risk.

Live Events

“A short-term rebound is likely,” said Bo Pei, an analyst at US Tiger Securities. “The reasoning is straightforward: extreme market moves are often followed by reversions.”

Congressional Democrats and Republicans have been engaged in a high-stakes game of chicken over Democrats’ insistence that a spending package include some restraints on Elon Musk’s DOGE’s cost-cutting crusade, with Republicans