- APAC stocks were mostly pressured amid the ongoing themes of tariffs and growth concerns heading closer to next week's 'Liberation Day' and with markets also bracing for the latest US PCE Price Index.
- DXY traded rangebound after weakening yesterday, USD/JPY retreated beneath the 151.00 level amid the underperformance in Japanese stocks and after firmer-than-expected Tokyo CPI data.
- EU reportedly looks to hit big tech in a crackdown on US services exports, according to FT. EU is set to limit Apple (AAPL) and Meta (META) fines to avoid angering US President Trump, according to FT.
- European equity futures indicate a lower cash market open with Euro Stoxx 50 futures down 0.3% after the cash market closed with losses of 0.6% on Thursday.
- Looking ahead, highlights include UK Q4 GDP & Retail Sales, German GfK Consumer Sentiment & Unemployment Rate, French & Spanish CPI, EZ Sentiment, US PCE (Feb) & Consumption, ECB SCE Speakers including Fed’s Bostic, Barr & ECB’s de Guindos, Supply from Italy.
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US TRADE
EQUITIES
- US stocks were subdued in what was a choppy session but settled well off worst levels, as markets continued to digest Trump's latest tariff actions following the announcement of a 25% tariff on all autos made outside of the US from April 2nd, while cautiousness remains ahead of April 2nd "Liberation Day" and what the President decides to implement. Participants also reflected on a slew of data releases which ultimately printed mixed and did little to spur risk appetite.
- SPX -0.33% at 5,693, NDX -0.59% at 19,799, DJI -0.37% at 42,300, RUT -0.39% at 2,066.
- Click here for a detailed summary.
TARIFFS/TRADE
- Canadian PM Carney is to speak with US President Trump on Friday.
- Canadian PM Carney said their response to these latest tariffs is to fight and they will fight the US tariffs with retaliatory trade actions of their own, while he added it is clear the US is no longer a reliable partner but noted it is possible that with comprehensive negotiations, they will be able to restore some trust with the US. Furthermore, Carney said US President Trump reached out on Wednesday night to schedule a call and he will speak to Trump in the next day or two but also noted that if President Trump threatens them again, they will fight back with everything they have to get the best deal for Canada.
- Ontario Premier Ford said he just spoke to PM Carney and agreed not to impose countermeasures until April 2nd, while he added there was no assurance from US Commerce Secretary Lutnick on softening of tariffs.
- US is to target all of Brazil’s sectors if it imposes tariffs on it, according to Folha.
- EU reportedly looks to hit big tech in a crackdown on US services exports, according to FT.
- EU is set to limit Apple (AAPL) and Meta (META) fines to avoid angering US President Trump, according to FT.
NOTABLE HEADLINES
- Fed's Collins (2025 voter) said she is cautiously and realistically optimistic about the economy and stated the economy started 2025 in a good place. Collins said inflation had come down but was still elevated at the start of the year, and the outlook now is much cloudier for inflation and growth. She noted it is inevitable that tariffs will increase inflation in the near term and it remains a question how long tariff-driven inflation will last. Furthermore, she said inflation risks are on the upside and she strongly supported the Fed's decision to hold rates steady, while she expects the Fed will likely hold rates steady for longer given the outlook and stated that watching inflation expectations and sentiment data is important right now.
- Fed's Barkin (2027 voter) said the current moderately restrictive stance is a good place to be and if conditions shift, the Fed can adjust. Barkin said given recent high inflation, tariffs could have more of an impact on prices, but still not known where rates will settle or how affected countries' businesses and consumers will respond. Barkin also commented that the direction of federal policy changes may be known, but the extent and how they net out in the economy remains uncertain, while he added federal policy changes create instability in the near term and the Fed is waiting for uncertainty to clear before acting.
- Elon Musk commented that their goal is to reduce the deficit by USD 1tln and will achieve most of that objective within a 130-day tenure, while he added that legitimate recipients of Social Security benefits will receive more, not less money, according to Fox News.
APAC TRADE
EQUITIES
- APAC stocks were mostly pressured amid the ongoing themes of tariffs and growth concerns heading closer to next week's 'Liberation Day' and with markets also bracing for the latest US PCE Price Index.
- ASX 200 traded rangebound and was just about kept afloat by strength in consumer staples and the commodity-related sectors with gold miners rejoicing after the precious notched another fresh record high.
- Nikkei 225 underperformed and dipped beneath the 37,000 level as automakers continued to suffer from Trump's recent auto tariff proclamation and with firmer-than-expected Tokyo CPI data supporting the case for the BoJ to continue with future policy adjustments.
- Hang Seng and Shanghai Comp failed to sustain the early resilience and slipped into negative territory amid a deluge of earnings and tariff uncertainty, while it was also reported that China rejected US President Trump's offer of tariff waivers in exchange for a TikTok deal.
- US equity futures were lacklustre after recent declines and as the Fed's preferred inflation gauge looms.
- European equity futures indicate a lower cash market open with Euro Stoxx 50 futures down 0.3% after the cash market closed with losses of 0.6% on Thursday.
FX
- DXY traded rangebound after weakening yesterday amid headwinds from the continued growth concerns and as the latest Trump tariffs were not immediately effective, while Trump had also previously flagged the potential for some leniency regarding next week's reciprocal tariffs. There were several recent Fed speakers although the rhetoric spurred little reaction with participants bracing for the Fed's preferred inflation gauge.
- EUR/USD traded sideways near the 1.0800 level after recently advancing on the back of a softer dollar, while tariffs remained the main focus with the EU said to be preparing its response to the new auto import tariffs by the US.
- GBP/USD held on to most of the prior day's spoils with the UK seen to be less tariff-exposed but with the upside capped after the recent pullback from resistance near the 1.3000 level and as GDP data looms.
- USD/JPY faded some of its recent advances and retreated back beneath the 151.00 level amid the underperformance in Japanese stocks and after firmer-than-expected Tokyo CPI data, which is seen as a leading indicator for national price trends and effectively supports the case for further BoJ policy normalisation.
- Antipodeans marginally softened alongside the mostly subdued risk appetite and absence of pertinent tier-1 data.
- PBoC set USD/CNY mid-point at 7.1752 vs exp. 7.2591 (Prev. 7.1763).
- Mexican Central Bank lowered its Interest Rate by 50bps to 9.00% vs. Exp. 9.00% (prev. 9.50%) with the board unanimous on the rate decision. Banxico estimates it could continue calibrating the monetary policy stance and consider adjusting it in similar magnitudes, while it added that the Mexican economy is expected to exhibit weakness once again in the first quarter of 2025.
FIXED INCOME
- 10yr UST futures extended on the prior day's intraday rebound but with upside capped after the curve recently steepened amid the subdued risk tone, tariff updates, US economic data and supply.
- Bund futures remained underpinned amid the ongoing US tariff threat against the bloc, while participants looked ahead to German GFK Consumer Sentiment and Unemployment Rate.
- 10yr JGB futures tracked the upside in global counterparts amid a flight to safety and despite the firmer-than-expected Tokyo inflation.
COMMODITIES
- Crude futures were little changed after slightly gaining yesterday in relatively narrow parameters as US President Trump's recent tariff announcement dominated macro newsflow and sentiment.
- Spot gold notched a fresh record high after recent dollar weakness and amid trade war fears.
- Copper futures languished around the prior day's lows after sliding amid the downbeat risk appetite.
CRYPTO
- Bitcoin gave back the prior day's gains and was pressured after failing to hold on to the USD 87,000 level.
NOTABLE ASIA-PAC HEADLINES
- Chinese President Xi said, at a meeting with foreign CEOs, that foreign firms' investment plays an important role and China was, is and will certainly be an ideal, safe and promising investment destination for foreign business people. Xi added they will ensure that foreign-funded enterprises have fair access to factors of production in accordance with the law and maintaining a stable, healthy, and sustainable development of China-US relations is in the fundamental interests of the two peoples. Xi also stated that blocking someone else's path will only block your own path in the end and blowing out other people's lights will not make your own lights brighter. Furthermore, he said economic and trade frictions should be properly resolved through equal dialogue and consultation, and noted that China will handle China-US relations in accordance with the principles of mutual respect, peaceful coexistence and win-win cooperation.
- China is to promote high-quality development of the aluminium sector and will actively respond to trade frictions, according to a plan by ten government departments cited by Global Times.
- Japanese PM Ishiba said the impact of US auto tariffs on the Japanese economy could be very big.
- Bank of Japan March Meeting Summary of Opinions noted one member said inflation is somewhat overshooting expectations and a member said wage hikes in spring wage talks are somewhat exceeding last year's figures, with nominal wages rising at a pace in line with the achievement of the BoJ's price goal. There was the opinion that they don't have enough data to gauge the impact of the January policy change and recent long-term rate moves on the economy, while it was reiterated that the BoJ will continue to hike rates if economy and prices move in line with forecast, but should not have a preset idea on specific policy management. A member stated that for the time being, the BoJ must scrutinise US policy impact on the global economy and markets, as well as the effect of BoJ's past rate hike on Japan's economy, then move to the next rate hike, while a member said they must adjust the degree of monetary support nimbly to avoid a buildup of financial excess. Furthermore, there was an opinion that when they next hike rates, they must consider shifting the monetary policy stance to neutral from accommodative, and at the next meeting, they must scrutinise inflation expectations, the chance of upside price risk materialising, and progress in wage hikes when setting monetary policy.
DATA RECAP
- Tokyo CPY YY (Mar) 2.9% vs Exp. 2.8% (Prev. 2.9%)
- Tokyo CPY Ex. Fresh Food YY (Mar) 2.4% vs Exp. 2.2% (Prev. 2.2%)
- Tokyo CPY Ex. Fresh Food & Energy YY (Mar) 2.2% vs Exp. 2.0% (Prev. 1.9%)
GEOPOLITICS
MIDDLE EAST
- Israeli military said it intercepted one launch from Lebanese territory and another one was detected.
- Israeli Defense Minister said if there is no peace in Kiryat Shmona and the Galilee communities, there will be no peace in Beirut, according to Asharq News. It was separately reported that Israel's Defence Minister holds Lebanon responsible for firing on Galilee and said Israel will respond forcefully against any threats.
- Houthi media reported four US raids on the Sanhan district in Sana'a, while a US official said they carried out strikes against Houthi sites around the clock, according to Al Arabiya.
- Iran's ambassador in Baghdad said US President Trump's message to Tehran included a request to dissolve or merge the Popular Mobilization Forces, which is unacceptable to us, while the ambassador added they refuse to negotiate on their ballistic missiles and the decision to dissolve the PMU is an Iraqi decision which he thinks is impossible, according to Sky News Arabia.
RUSSIA-UKRAINE
- Russia and US teams may meet regarding Ukraine in Riyadh in mid-April, according to TASS.
- Russian President Putin suggested the possibility of placing Ukraine under temporary administration to allow for elections and signature of accords, according to Russian news agencies. Putin said Russia stands for resolving Ukraine conflict through peaceful means and wants to work with Europe on resolving Ukraine conflict, but the EU is acting inconsistently. It was separately reported that Putin said Russia welcomes a peaceful resolution to the Ukraine conflict "but not at our expense", according to CGTN Europe.
- White House said governance in Ukraine is determined by its constitution and the people of Ukraine.
OTHER
- Russian President Putin said the US is serious about Greenland and will promote its interests in the Arctic, while he noted concern that NATO sees the North as the possible foothold for conflicts. Putin said Russia has never threatened anyone in the Arctic, but they are closely watching the situation and stated there is a possibility for cooperation in the Arctic, including with Western states.
- US Secretary of State Rubio warned if Venezuela attacked Guyana or Exxon (XOM), "it would be a very bad day" for them. It was also reported that the Guyanese President agreed with the US to further integrate energy production after a meeting with US Secretary of State Rubio.
- US Defense Secretary Hegseth said during a visit to the Philippines that he and US President Trump want to express the ironclad commitment they have to the mutual defence treaty and are very committed to the Philippines-US alliance, friendship and cooperation they have. Hegseth added that friends need to stand shoulder to shoulder to deter conflict and ensure that there's freedom of navigation in the South China Sea, and noted that deterrence is necessary around the world, but specifically in this region considering the threats from the Communist Chinese. Hegseth later announced they are doubling down on the US-Philippines partnership and agreed on the next steps to re-establish deterrence in the Indo-Pacific with the US to deploy advanced capabilities to the Philippines.
