Asia-Pacific stock markets started Tuesday’s trading session mostly on a positive note, with investors seemingly shrugging off a fresh tariff threat from US President Donald Trump, this time directed at India over its purchases of Russian oil.
While major regional indices like Japan’s Nikkei and South Korea’s Kospi advanced, Indian benchmarks, including the Sensex, are bracing for a more subdued and potentially volatile start.
The latest development in the ongoing US trade saga came via President Trump’s social media platform, Truth Social, where he announced plans to significantly raise tariffs on Indian exports to the United States.
“India is not only buying massive amounts of Russian Oil, they are then, for much of the Oil purchased, selling it on the Open Market for big profits,” Trump wrote, signaling his clear displeasure.
On Monday, Trump again took to Truth Social to target India’s buying of Russian oil, threatening to increase the tariff levels from the current 25%, though he did not specify a new number. This follows a threat from last week of a 25 percent tariff plus an unspecified penalty for India’s business dealings with Russia.
India pushes back, cites US and EU’s own trade with Russia
In a firm response, India stated that it is being “targeted” by both the US and the European Union over its imports of Russian oil.
India’s foreign ministry, in a statement late Monday, argued that the country only began importing oil from Russia after its traditional supplies were diverted to Europe following the outbreak of the Russia-Ukraine war in 2022.
The ministry then pointedly called out the US and the EU, stating, “it is revealing that the very nations criticizing India are themselves indulging in trade with Russia.
Unlike our case, such trade is not even a vital national compulsion [for them].” Citing European Commission data, India highlighted that the EU’s bilateral trade with Russia stood at 67.5 billion euros ($78.1 billion) in 2024, with its services trade in 2023 at 17.2 billion euros.
India argued that the bloc’s trade with Russia was “significantly more” than India’s total trade with the country.
A broadly positive day for most of Asia
Despite the new tariff threats, most Asia-Pacific markets started the day in the green. Japan’s benchmark Nikkei 225 was up 0.54%, while the broader Topix inched higher by 0.45%.
South Korea’s Kospi gained an impressive 1.77%, and the small-cap Kosdaq rose 1.83%. Australia’s S&P/ASX 200 also gained, up 0.84%. The broader MSCI Asia Pacific Index rose 0.4%.
Mainland China and Hong Kong stocks also inched higher, tracking the gains in the region. Mainland China’s CSI 300 rose 0.32%, while Hong Kong’s Hang Seng Index added 0.24%.
This positive sentiment was partly supported by a backdrop of a weaker US dollar, with a gauge of the currency dropping 0.1%.
Indian markets: Sensex to open muted amid tariff and policy watch
Indian benchmark indices, the Nifty and Sensex, are set for a muted start on Tuesday, August 5.
The fresh tariff threats from President Trump are expected to weigh on sentiment, potentially testing the recovery that the Nifty 50 index made on Monday, which had marked a strong start to the week after five previous weeks of selling.
As of 8 am, GIFT Nifty was quoting at 24,767, down 0.1 percent, hinting at a soft open for domestic equities. Today will also mark the first weekly expiry of the Sensex contracts for the August series and is the second day of the RBI Monetary Policy Committee meeting, adding to potential market volatility.
Earnings reactions will also be a key factor, with pharma names like Aurobindo and Sanofi, and other stocks like DLF and Delta Corp reacting to their results. Nifty earnings will return today with major reports from Bharti Airtel and Adani Ports, among others.
Analysts note that the 24,750 to 24,800 zone is a key resistance area for the Nifty on the upside.
Oil and US markets in focus
In commodity markets, oil steadied after a three-day drop as investors weighed the risks to Russian supplies, with President Trump stepping up his threat to penalize India for buying Moscow’s crude. US Treasuries were little changed.
The positive mood in Asia was also partly supported by a strong session on Wall Street on Monday, where US stocks climbed as investors balanced robust corporate earnings with growing expectations for a Federal Reserve rate cut, following weaker-than-expected jobs data.
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