Asian equities resume rally on tariff relief for Indonesia, Philippines

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• Indonesia equities rise 1.3%, Philippines up 1.7%
• Thai stocks jump over 2%
• Singapore shares extend rally into 13th session
• MSCI EM Asia equities index at Nov 2021 high

Emerging Asian market equities resumed their rally on Wednesday, led by strong gains in Indonesia and the Philippines after the two countries hashed out a deal with the U.S. for tariff rates lower than those threatened earlier.

READ: US-Philippines trade talks yield modest tariff shift after Trump-Marcos meeting | Marcos says U.S. trade deal a ‘significant achievement’

An MSCI index of emerging Asian equities <.MIMS00000PUS> jumped to a more than 3-1/2-year high, rebounding from a slight dip on Tuesday that snapped its three-day win streak.

A subset of ASEAN stocks <.MISU00000PUS>, dominated by Singapore, also jumped nearly 1%. Singapore’s Straits Times index <.STI> extended its rally into its 13th consecutive session – its longest ever – during which it advanced more than 5%.

Indonesia’s benchmark <.JKSE> jumped more than 1%, and headed to its highest closing since mid-December. Stocks in the Philippines <.PSI> jumped 1.7% to mark their best day in a month.

U.S. President Donald Trump announced new import duties of 19% for goods from the Philippines, a touch below the rate of 20% he threatened earlier this month.

Indonesia agreed to eliminate levies on more than 99% of U.S. goods and scrap barriers to American firms, while the U.S. said it will drop its tariff rate on Indonesian products to 19% from 32%.

“Asian equities are rallying on a cocktail of positives,” said Mohit Mirpuri, an equity fund manager at SGMC Capital.

“Tariff clarity with the United States across multiple fronts, including Japan and the Philippines, is lifting sentiment…Investors are rotating back into Asia, where valuations look compelling and policy risk is finally easing.”

Japan, Asia’s second-largest economy, also reached an agreement with the U.S. to reduce hefty tariffs. In a reciprocal move, Tokyo pledged to invest $550 billion in the U.S.

South Korea’s KOSPI index <.KS11> advanced 0.4%, while Taiwan’s benchmark <.TWII> jumped 1.4%. Vietnam’s benchmark <.VNI> was largely flat in the afternoon, after touching a more than three-year high earlier in the day.

Thai stocks <.SETI> jumped more than 2% to a mid-May high, led by industrial stocks. The benchmark has advanced 12% so far this month, in stark contrast to a near 22% decline in the first six months of the year.

In currency markets, South Korea’s won <KRW=KFTC> and Taiwan’s dollar <TWD=TP> appreciated up to 0.4%, while the Thai baht <THB=TH>, Singapore dollar <SGD=>, Malaysian ringgit <MYR=> and Indonesian rupiah <IDR=> remained little changed.

“Against the backdrop of USD weakness, Asian currencies will broadly be supported, though country-specific factors could shape their relative performance,” said Lloyd Chan, a senior currency analyst at MUFG.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields steady at 6.484%

** Malaysia PM announces cash aid, fuel price cut

** Japan PM Ishiba to announce resignation next month

** Nikkei share average <.N225> soars over 3% to 1-year peak

** Singapore June core inflation lower than forecast

—Reporting by Rishav Chatterjee and Sameer Manekar in Bengaluru; Editing by Clarence Fernandez and Rashmi Aich