Haruhiko Kuroda, governor of the Bank of Japan (BOJ), speaks during a news conference at the central bank’s headquarters in Tokyo, Japan (Photographer: Kiyoshi Ota/Bloomberg)  

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China faces a major tariff test. The Kuroda effect is back, and the Trans-Pacific Partnership gets new life. Here are some of the things people in markets are talking about.

Tariff Aftermath

U.S. President Donald Trump may soon get a lesson about tangling with China on trade: Beijing can punch back. China has a long history of tit-for-tat retaliation when it comes to trade disputes and may well dust off the same policy playbook in the wake of the Trump administration’s decision to slap tariffs on solar panels and washing machines. China’s Ministry of Commerce condemned the tariffs Tuesday, calling them a misuse of trade measures, and said it hopes Washington will show restraint in imposing trade restrictions. The tariffs aren’t directed specifically at China, but it is the world’s biggest producer of solar panels and exported 21 million washing machines last year worth almost $3 billion.

Climbing After Kuroda

The Kuroda effect has returned to Japan’s stock market. On Tuesday, Japanese shares rallied past milestones last seen almost 27 years ago, and investors have the Bank of Japan to thank for that. Traders can now breathe relief as the one lingering worry for a buoyant stock market is out of the way after the Bank of Japan indicated no change in monetary policy -- and said inflation expectations remain more or less unchanged. Governor Kuroda also delivered a message to investors speculating the BOJ might be losing its taste for stimulus: Not so fast. He said the central bank wasn’t in a position to even consider an exit.

TPP, Take Two

The 11 remaining members of a Pacific trade pact abandoned by U.S. President Donald Trump have reached a deal on a revised agreement, with the nations to work toward signing the deal by early March, according to Singapore’s government. Senior officials resolved outstanding issues, finalized the list of suspended provisions and completed the legal verification of the agreement, concluding negotiations on what has been renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Singapore’s trade ministry said Tuesday in a statement. The deal was reached after two days of talks in Tokyo.

Commodity Crush

Copper slumped to a one-month low as a large delivery of metal into exchange warehouses in Asia refocused attention on demand during a seasonally weak period for industrial activity in China. Prices fell as much as 2.6 percent on the London Metal Exchange as inventories tracked by the bourse jumped by the most in 10 months, continuing a pattern of spikes and drawdowns in LME inventories seen throughout 2017. The delivery comes as manufacturers in China prepare to dial back output during the week-long Lunar New Year holiday next month, and adds to evidence that copper demand is hitting a soft patch often seen at this time of year, according to Robin Bhar, an analyst at Societe Generale SA. Iron ore futures sank by the most this year as steelmakers in China facing a decline in profitability switch back to using more lower-grade material, cutting into demand for higher-quality ore, according to China Merchants Futures Co.

Coming Up….

Japan will be front and center on the eco docket as Asia gets under way, with economists forecasting it will report an expanded trade surplus for December. We also get New Zealand credit card spending, while Malaysia is expected to report inflation accelerated at the end of 2017. Europe's day will bring a bevy of flash PMIs -- including for manufacturing in Germany, France and the eurozone -- as well as U.K. unemployment and South African inflation. The U.S. is forecast to report a decline in existing home sales and there'll be the flash PMIs from Markit for the world's largest economy. And a Brazilian court of appeals is due to decide whether to uphold the conviction of former president Luiz Inacio Lula da Silva on corruption charges. Opinion polls show Lula is the front-runner in the 2018 presidential elections.

What we’ve been reading

This is what caught our eye over the last 24 hours.

To contact the author of this story: Joanna Ossinger in New York at jossinger@bloomberg.net.

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