Author: Lei Wei

SINGAPORE (Reuters) - Global stocks and U.S. Treasuries were volatile on Tuesday, reversing a brief relief rally in early trading after Donald Trump announced plans to impose trade tariffs on neighboring countries in the first hours of his new presidency. .

U.S. markets were closed for the holiday on Monday, so the initial reaction to Trump's inauguration was felt in Asian trading on Tuesday.

Trump said his administration was considering imposing 25% tariffs on Mexico and Canada as early as February 1, a move that dampened investors' brief mention of tariffs in his inauguration speech. And cheered the hope of delaying tariffs.

Trump's plans for steep import tariffs and tax cuts are a key area of ​​concern for financial markets as such policies are believed to stoke inflation and heat up the U.S. economy again, boosting the dollar and hurting bonds.

U.S. stock index futures reacted quickly to the latest developments, reversing gains earlier in the session, with Nasdaq futures down 0.4% and S&P 500 futures down 0.25%.

Europe's Stoxx 50 futures and FTSE futures both fell 0.3%, while Japan's Nikkei also reversed early gains and ended up down 0.4%.

Khoon Goh, head of Asia research at ANZ Bank, said: "At some point, we are very sure that Trump will start imposing tariffs... His intentions are very clear."

"Just because he didn't address it on day one doesn't mean it's not on the agenda. It's certainly on the agenda, it's just that we have to wait and see what form he takes."

MSCI (Morgan Stanley Capital International), the broadest index of Asia-Pacific shares outside Japan, rose 0.2%.

In the Treasury market, the benchmark 10-year U.S. Treasury yield recovered some of its early losses but remained 4 basis points lower at 4.5682%. Yields are inversely related to bond prices.

The two-year Treasury yield was last at 4.2424%.

Trump did not impose new tariffs in his first hours as president, which in turn led to a broad decline in the dollar and a sharp reversal from earlier in the session.

Since then, the dollar has regained its losses, with the euro falling 0.36% against the dollar to $1.0378 and the pound falling 0.4% against the dollar to $1.2282.

USD/MXN surged more than 1% to 20.69. It also rose 0.8% against the Canadian dollar to C$1.4423.

"Investors are now facing a new reality where sudden policy shifts and heightened volatility have become the norm," said Boris Kovacevic, global macro strategist at Convera.

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