- APAC stocks began the week mixed amid tariff-related concerns and as participants digested the softer-than-expected Chinese inflation data.
- US House Republicans unveiled a stopgap funding bill to keep the government funded through September 30th.
- US President Trump said on Friday regarding Canada that he may do reciprocal tariffs as early as Friday or Monday; added the EU has been a terrible abuser.
- European equity futures indicate a higher cash market open with Euro Stoxx 50 future up 0.7% after the cash market closed lower by 0.9% on Friday.
- DXY is a touch firmer, EUR/USD remains on a 1.08 handle, JPY is the marginal outperformer across the majors.
- Leaders of Germany’s CDU/CSU and SPD said they have completed preliminary talks on forming a coalition government.
- Looking ahead, highlights include German Industrial Production & Trade Balance, EU Sentix Index, US Employment Trends, NY Fed SCE, Chinese M2 Money Supply, ECB Survey of Monetary Analysts, RBNZ’s Hawkesby.
- US clocks moved forward by an hour to Daylight Saving Time, meaning there is now just a four-hour time difference between London and New York for the next three weeks.
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US TRADE
EQUITIES
- US stocks closed in the green on Friday but the steep decline for the week remained intact amid US growth concerns and continued tariff uncertainty in what was a heavy headline day with a deluge of risk events including the US jobs report and comments from Fed Chair Powell. The jobs data showed headline NFPs missed forecasts and the unemployment rate unexpectedly ticked higher with tremendous uncertainty ahead due to the government job cut efforts from the DOGE. Meanwhile, Fed Chair Powell largely reiterated his messaging from January and February, stressing the Fed is not in a rush to adjust policy with uncertainty ahead, but the economy remains in a good place.
- SPX +0.55% at 5,770, NDX +0.74% at 20,201, DJI +0.52% at 42,802, RUT +0.43% at 2,075.
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TARIFFS/TRADE
- US President Trump said on Friday regarding Canada that he may do reciprocal tariffs as early as Friday or Monday, while he added the EU has been a terrible abuser on tariffs and India has agreed to cut tariffs way down.
- US Commerce Secretary Lutnick said President Trump will not ease up on fentanyl-related tariffs and that tariffs will come off if fentanyl ends, while he noted steel and aluminium tariffs take effect on Wednesday and they will revisit fentanyl and reciprocal trade issues on April 2nd.
- Incoming Canadian PM Carney vowed to discover new trade partners and ensure borders, while they will keep tariffs on the US until Americans show them respect. Carney said they cannot let Trump succeed and will ensure that all proceeds from tariffs will be used to protect their workers.
- Canadian Finance Minister LeBlanc said Canada is ready for an immediate review of the USMCA trade agreement and there is still room for talks on steel and aluminium tariffs.
- China’s MOFCOM said it will impose tariffs on some imports from Canada in retaliation for Canadian tariffs on Chinese goods effective March 20th in which it will impose 100% tariffs on Canadian rapeseed oil imports and 25% on port and seafood imports, while it will impose additional tariffs on some other Canadian goods.
- South Korean Acting President Choi ordered to communicate actively with the US about tariff rates and will consult with the US about cooperation in shipbuilding and energy sectors, while they are to review non-tariff measures related to US reciprocal tariffs.
NOTABLE HEADLINES
- Fed Chair Powell reiterated on Friday that the Fed does not need to be in a hurry to adjust rates and uncertainty around Trump administration policies and their economic effects remains high. Powell said the Fed is well positioned to wait for greater clarity and repeated that Fed policy is not on a preset course, as well as noted that they can maintain policy restraint for longer if inflation progress stalls, or ease if the labour market unexpectedly weakens or inflation falls more than expected.
- Fed's Kugler (Voter) said on Friday that she sees steady policy for some time on recent inflation data, as well as stated that the February jobs number was a 'solid number' and hiring remains above the breakeven level, while she isn't that worried about the small uptick in the unemployment rate.
- Fed’s Daly (2027 voter) suggested that economic research shows uncertainty is a source of demand restraint and noted there are plenty of signs that the economy is solid but the market is giving mixed signals which is the reason monetary policy should be careful and deliberate, while she added that the Fed has rates in a good place.
- US President Trump said he will pick the Federal Reserve Vice Chairman for Bank Supervision fairly soon It was also reported that Trump declined to predict whether the US could face a recession amid stock market concerns about his tariff actions on Mexico, Canada and China over fentanyl, while he said tariffs on Mexico and Canada could go up, according to Reuters citing an interview with Fox News.
- US House Republicans unveiled a stopgap funding bill that would keep the government funded through September 30th. It was later reported that President Trump said the House and Senate have put together a very good funding bill and he urges Republicans to vote for it in the week ahead.
APAC TRADE
EQUITIES
- APAC stocks began the week mixed amid tariff-related concerns and as participants digested the softer-than-expected Chinese inflation data from over the weekend.
- ASX 200 eked mild gains with outperformance seen in energy, resources and materials but with the upside capped by weakness in defensives and the economic concerns related to Australia's largest trading partner.
- Nikkei 225 gradually shrugged off the initial indecisiveness and clawed back early losses to reclaim the 37,000 status as participants digested data releases including the slower-than-forecast growth in Labour Cash Earnings.
- Hang Seng and Shanghai Comp retreated amid deflationary headwinds after CPI data slipped into negative territory for the first time in over a year, while tariff concerns lingered as China's retaliatory tariffs against the US's March 4th additional tariffs took effect today.
- US equity futures (ES -0.5%, NQ -0.6%) were pressured at the reopen amid tariff and growth concerns after Commerce Secretary Lutnick recently commented that President Trump will not ease up on fentanyl-related tariffs and that steel and aluminium tariffs will take effect on Wednesday, while President Trump declined to predict whether the US could face a recession amid stock market concerns about his tariff actions and also said that tariffs on Mexico and Canada could go up.
- European equity futures indicate a higher cash market open with Euro Stoxx 50 future up 0.7% after the cash market closed lower by 0.9% on Friday.
FX
- DXY dollar marginally strengthened in quiet trade amid the mixed performance in its major counterparts and in the aftermath of last Friday's NFP miss. Furthermore, the Fed has entered into a Blackout period although there were some comments late on Friday from Fed's Daly who suggested they should be careful and deliberate with monetary policy, while the focus this week for the US turns to CPI data on Wednesday.
- EUR/USD faded its initial mild gains in rangebound trade with few pertinent drivers to spur the single currency.
- GBP/USD slightly softened towards the 1.2900 level in quiet UK-specific newsflow and with an almost non-existent data release schedule for the UK for most of this week leading up to the monthly GDP estimates due on Friday.
- USD/JPY retreated but then bounced off lows with price action at the whim of the choppy risk sentiment in Tokyo.
- Antipodeans remained afloat but with the upside capped amid the mixed risk appetite and weakness in the yuan following deflationary Chinese data.
- PBoC set USD/CNY mid-point at 7.1733 vs exp. 7.2355 (Prev. 7.1705).
- Former Central Banker Mark Carney won the Liberal Party race to become the next Canadian PM, according to official results cited by Reuters.
FIXED INCOME
- 10yr UST futures gained at the reopening of futures trading in tandem with the pressure in US equity futures amid tariff concerns and soft Chinese inflation data from over the weekend.
- Bund futures remained pressured and printed fresh contract lows after last week's slide, while participants now await the latest German Industrial Production and Trade data.
- 10yr JGB futures were subdued and failed to benefit from the slower-than-expected growth in Labour Cash Earnings with demand hampered amid a recovery in Tokyo risk sentiment and following weaker-than-previous results from this month's 5yr JGB auction.
COMMODITIES
- Crude futures were lacklustre amid the mixed risk tone and following the soft China inflation data.
- Iraq set the April Basrah medium crude official selling price to Asia at plus USD 2.15/bbl vs Oman/Dubai and the OSP to Europe at minus USD 1.50/bbl vs Dated Brent, while it set the OSP to North and South America at minus USD 0.65/bbl vs ASCI, according to SOMO.
- US Treasury was reported on Friday to be examining options for easing energy sanctions on Russia only if Russia and Ukraine reach a peace deal, according to Reuters citing sources. It was also reported that President Trump's team was weighing ending the oil price cap if Russian talks progressed, according to Bloomberg.
- Spot gold traded rangebound amid mild dollar strength and a lack of pertinent catalysts for the precious metal.
- Copper futures trickled lower amid the weakness in China due to the ongoing tariff war and deflationary data.
- US is in exploratory talks with Congo about a potential minerals deal, according to FT.
CRYPTO
- Bitcoin found some relief overnight after retreating throughout the weekend to near the USD 80,000 level.
NOTABLE ASIA-PAC HEADLINES
- China’s Housing Minister said market confidence has been enhanced and the property market shows positive changes, while they will step up lending for ‘White list’ property projects and promote the purchase of existing housing stocks. China will give more autonomy to local governments in purchasing housing stocks for affordable housing and part of China’s local government special bonds will be used for purchasing land and housing stocks.
- China’s Human Resources Minister said they face an arduous task to stabilise and expand employment in 2025 and the external environment for employment could become more complex and severe but added that the employment situation is generally stable. Furthermore, China will step up resources and funding to support employment and will prepare to roll out new policies to support employment.
- South Korean prosecutors decided not to appeal President Yoon’s release.
DATA RECAP
- Chinese CPI MM (Feb) -0.2% vs. Exp. -0.1% (Prev. 0.7%)
- Chinese CPI YY (Feb) -0.7% vs. Exp. -0.5% (Prev. 0.5%)
- Chinese PPI YY (Feb) -2.2% vs. Exp. -2.1% (Prev. -2.3%)
GEOPOLITICS
MIDDLE EAST
- Israel’s Energy Minister ordered the stoppage of electricity transmission to Gaza, according to Israeli broadcaster Kan.
- Hamas said there are positive indicators over negotiations for the second phase of the Gaza ceasefire deal, while it noted its delegation met Egypt’s spy chief in Cairo to discuss the Gaza ceasefire and it urged commitment to all the Gaza ceasefire deal’s articles and the immediate start of talks for the second phase. It was separately reported that a Hamas official said the group is open to releasing American-Israeli hostage Edan Alexander as part of talks to end the Gaza war, according to Al-Aqsa TV.
- US hostage envoy Boehler said meetings with Hamas leaders in recent days were very helpful and that something could come together within weeks on Gaza and hostages, while he thinks all prisoners could get out not just Americans.
- France, Germany, Italy and Britain said they welcome the Arab plan for Gaza reconstruction which they said shows a realistic path to reconstruction of Gaza and are committed to working with the Arab initiative.
- US State Department has not renewed a waiver for Iraq to buy Iranian electricity and noted the decision ensures the US does not allow Iran any degree of economic relief. It was separately reported that the Iraqi PM’s Foreign Affairs advisor Alaaldin said non-renewal of US sanctions waiver for Iraq to purchase Iranian energy presents temporary operational challenges, while Iraq is committed to its strategic goal of achieving energy self-sufficiency.
- Iran Supreme Leader Khamenei said Tehran will not negotiate under pressure from a bullying country and will never accept demands to curb its missile program. It was separately reported that the White House reiterated that Iran's nuclear concern can be dealt with by making a deal or militarily, while it hopes the Iranian regime puts its people and best interests ahead of terror.
- Iran’s mission to the UN said talks on the potential militarisation of Iran’s nuclear program may be considered and Iran will not discuss the dismantlement of its nuclear program.
- Joint naval drills between Iran, Russia and China will begin on Monday in the Chabahar region of Iran.
- US and Russia ask UN Security Council to meet on Monday regarding escalating Syria violence It was separately reported that UN rights chief Volcker Turk said the killing of civilians in coastal areas in northwest Syria must cease immediately.
- UK Foreign Secretary Lammy said reports that a large number of civilians have been killed in coastal areas in Syria in ongoing violence are horrific and authorities in Damascus must ensure the protection of all Syrians and set out a clear path to justice.
- Syrian leader Sharaa said Syria is confronting attempts to drag it into a civil war and that remnants of the former regime have no choice but to surrender immediately, while he added that Syria will not allow any external or local forces to drag it into chaos or civil war.
RUSSIA-UKRAINE
- US President Trump said Ukraine will sign the minerals deal but needs to show more willingness for peace, while Trump also stated they are looking at a lot of things with respect to tariffs on Russia and will make a lot of progress this week, while he is expecting good results coming out of Saudi on Ukraine and stated they have just about lifted the intelligence pause on Ukraine.
- Russian Defence Ministry said it has taken one village in Russia’s Kursk region and another in Ukraine’s Sumy region, while Russia also said it has taken the village of Kostyantynopil in eastern Ukraine’s Donetsk region. Furthermore, it was later reported that Russian forces recaptured three more settlements in the Kursk region.
OTHER
- North Korea's Foreign Ministry said US and South Korean military exercises are a dangerous provocative act, according to KCNA. It was separately reported that North Korea unveiled a nuclear-powered submarine under construction for the first time which appears capable of carrying 10 missiles, according to Nikkei.
EU/UK
NOTABLE HEADLINES
- Leaders of Germany’s CDU/CSU and SPD said they have completed preliminary talks on forming a coalition government.
- S&P affirmed Norway at 'AAA'; Outlook Stable.
