Asia stocks rally as US-Vietnam talks spark tariff relief hopes

Most stock markets in emerging Asian economies rose on Thursday, after trade discussions between the United States and Vietnam raised the possibility of breakthroughs for other countries in the region ahead of the July 9 tariff deadline.

U.S. President Donald Trump said the country would impose a 20% tariff on exports from Vietnam, sharply down from the 46% planned earlier. The announcement, though scant on details, eased tensions with its tenth-biggest trading partner.

Stocks in Vietnam VNINDEX rose 0.6% to their highest level since April 2022, while the dong USDVND dropped 0.3% to hit a record low of 26,229 per U.S. dollar.

Analysts at DBS noted the proposal could mitigate downside risks to Vietnam's economic growth but "may not prevent a slowdown in the coming quarters."

The U.S.-Vietnam talks lifted sentiment across most Asian stock markets on hopes other countries could reach similar outcomes before the July 9 deadline.

An MSCI gauge of equities in emerging Asian markets (.MIMS00000PUS) advanced 0.4% and touched a three-and-a-half-year high earlier in the day.

Philippine stocks PPSEI climbed 1.1% to hit their highest since May 15. The archipelago faces an 18% tariff under Trump's plan.

Shares in Taiwan TWSE:TAIEX and Indonesia COMPOSITE climbed 1.1% and 0.2%, respectively.

South Korean stocks KOSPI ended more than 1.3% higher, marking their highest close since September 2021, after President Lee Jae Myung said he was working to secure a "mutually beneficial and sustainable" outcome from trade talks with the United States.

"Today's broad-based rally reflects multiple catalysts converging - Vietnam's 20% tariff deal setting a precedent, India pushing hard for its own agreement and the U.S.-China trade restrictions being rolled back on ethane," said Christopher Forbes, head of Asia, CMC Markets.

Thailand stocks SET were up 0.9%, after the country's opposition parties said they would hold off on launching a no-confidence vote against suspended Prime Minister Paetongtarn Shinawatra pending a court ruling.

The dollar index DXY was flat as investors awaited the U.S. jobs report for June, due later in the day. Trump's massive tax and spending bill was also in focus.

While most Asian currencies traded sideways, Taiwan's dollar USDTWD strengthened 0.8% to touch its highest since early April 2022.

Exporters' demand to sell the greenback and steady inflows into domestic equities this week sustained demand for the Taiwan dollar, OCBC forex strategist Christopher Wong said.

Indonesia's rupiah USDIDR was up 0.3%. The Philippine peso USDPHP inched 0.1% higher against the flat dollar, even as the central bank said it could cut rates two more times this year.

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