- US stocks were pressured and the major indices closed notably in the red after selling off through the duration of the US afternoon on the broader risk-off theme amid poor US data and tariff comments. In terms of the data, Feb ISM Manufacturing PMI disappointed with the headline underwhelming, driven by employment and new orders plunging below 50, but prices paid soared. In the accompanying comments, many mentioned the uncertainties the looming tariffs are causing, while the latest Atlanta Fed GDPnow forecast estimated Q1 real GDP growth at -2.8% from -1.5% following the data. Markets were then later spooked after President Trump said reciprocal tariffs start April 2nd and tariffs on Canada and Mexico are to start on Tuesday with no room left for a deal, while he also announced that China tariffs are to double to 20%.
- USD started the week notably on the back foot with early pressure exacerbated following weaker-than-expected ISM data but later saw some mild support following US President Trump's tariff comments in which he stated that reciprocal tariffs start on April 2nd and tariffs on Canada and Mexico are to start on Tuesday, while he signed an order to double the China tariff to 20% from 10% and said will penalise countries weakening currencies with tariffs and mentioned China when talking about weak currencies. The announcement pressured CAD, MXN and CNH although the support for the greenback was only brief with the DXY languishing near today's lows firmly beneath the 107.00 level.
- Looking ahead, highlights include South Korean Industrial Production & Retail Sales, Japanese Unemployment Rate & Household Confidence, Australian Retail Sales, Current Account & Net Exports Contribution, RBA Minutes, Supply from Japan, US Tariffs on Canada, Mexico & China are set to take effect.
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LOOKING AHEAD
- Highlights include South Korean Industrial Production & Retail Sales, Japanese Unemployment Rate & Household Confidence, Australian Retail Sales, Current Account & Net Exports Contribution, RBA Minutes, Supply from Japan, US Tariffs on Canada, Mexico & China are set to take effect.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks were pressured and the major indices closed notably in the red after selling off through the duration of the US afternoon on the broader risk-off theme amid poor US data and tariff comments. In terms of the data, Feb ISM Manufacturing PMI disappointed with the headline underwhelming, driven by employment and new orders plunging below 50, but prices paid soared. In the accompanying comments, many mentioned the uncertainties the looming tariffs are causing, while the latest Atlanta Fed GDPnow forecast estimated Q1 real GDP growth at -2.8% from -1.5% following the data. Markets were then later spooked after President Trump said reciprocal tariffs start April 2nd and tariffs on Canada and Mexico are to start on Tuesday with no room left for a deal, while he also announced that China tariffs are to double to 20%.
- SPX -1.76% at 5,850, NDX -2.20% at 20,426, DJI -1.48% at 43,191, RUT -2.81% at 2,102.
- Click here for a detailed summary.
TARIFFS/TRADE
- US President Trump said reciprocal tariffs start on April 2nd and tariffs on Canada and Mexico are to start on Tuesday, while also commented there is no room left for a deal on tariffs on Mexico and Canada, while he reiterated the plan to double the China tariff to 20% from 10%. Furthermore, Trump said will penalise countries weakening currencies with tariffs and mentioned China when talking about weak currencies and doesn't think China will retaliate too much, while the White House said President Trump signed an order to tariff China at 20%, not 10%.
- US President Trump posted on Truth “To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States. Tariffs will go on external product on April 2nd. Have fun!”
- US Commerce Secretary Lutnick said Canada and Mexico have done a good job on the border and they must tackle fentanyl, while President Trump will decide on tariffs on Monday afternoon and wants automaker manufacturing jobs back in the US. It was separately reported that Lutnick said President Trump will decide on tariffs today and will put it out on Tuesday, according to CNN.
- White House Trade Adviser Navarro doesn't see US President Trump wavering on tariffs and stated that inflationary impact from tariffs would be "second order small", according to CNBC.
- Canada’s Foreign Minister said if US President Trump imposes tariffs, "we're ready". Canada’s Energy Minister Wilkinson earlier commented that if the US proposes tariffs on Canada, then Canada will retaliate and would start looking at products sold in large volumes by American companies into Canada, according to CNBC.
- Mexican President Sheinbaum said they are going to wait and see what happens on a potential tariff announcement from US President Trump and that they have plans A, B, C and D, while they are to discuss the decision on Tuesday and whatever the US decision is, Mexico will make its own decision. Furthermore, she does not rule out a phone call with US President Trump and said coordination with the US government on fentanyl and trade has been very good, as well as stated that Mexico reduced fentanyl trafficking and migration to the US.
NOTABLE HEADLINES
- Fed's Musalem (2025 voter) said the outlook is for continued solid economic growth, but recent consumer and housing data pose some downside risk. Musalem added that restrictive monetary policy is still needed to ensure inflation returns to the 2% target, while a patient approach to policy will help achieve the Fed's goals and sustain economic expansion.
- White House said US President Trump to make 'investment announcement' on Monday, while it was later reported that US President Trump announced TSMC (2330 TT/TSM) plans to make a USD 100bln investment in the US.
DATA RECAP
- US ISM Manufacturing PMI (Feb) 50.3 vs. Exp. 50.8 (Prev. 50.9)
- US ISM Manuf Employment Idx (Feb) 47.6 (Prev. 50.3)
- US ISM Manuf New Orders Idx (Feb) 48.6 (Prev. 55.1)
- US ISM Mfg Prices Paid (Feb) 62.4 vs. Exp. 55.8 (Prev. 54.9)
- US S&P Global Manufacturing PMI Final (Feb) 52.7 (Prev. 51.6)
- US Construction Spending MM (Jan) -0.2% (Prev. 0.5%)
FX
- USD started the week notably on the back foot with early pressure exacerbated following weaker-than-expected ISM data but later saw some mild support following US President Trump's tariff comments in which he stated that reciprocal tariffs start on April 2nd and tariffs on Canada and Mexico are to start on Tuesday, while he signed an order to double the China tariff to 20% from 10% and said will penalise countries weakening currencies with tariffs and mentioned China when talking about weak currencies. The announcement pressured CAD, MXN and CNH although the support for the greenback was only brief with the DXY languishing near today's lows firmly beneath the 107.00 level.
- EUR steadily gained from the morning amid somewhat better-than-expected PMIs and firmer-than-expected EU HICP data.
- GBP advanced on the back of a softer dollar which helped GBP/USD reclaim the 1.2700 status.
- JPY strengthened with USD/JPY slipping beneath the 150.00 handle owing to the dollar selling and haven demand.
FIXED INCOME
- T-notes gained in the aftermath of the soft-ISM report and steeper contraction projected in Q1 by the Atlanta Fed GDPnow model.
COMMODITIES
- Oil prices declined with selling pressure seen after a report that OPEC+ will go ahead with the April oil output increase, while OPEC+ have since confirmed that the group is to proceed with supply hikes but could pause or reverse the decision based on market conditions.
- OPEC+ confirmed the decision to proceed with supply hikes and could pause or reverse the decision based on market conditions, while it sees healthy market fundamentals and a positive outlook.
- Iraq talks with oil firms hit a snag, delaying Kurdistan exports, according to Bloomberg.
- Libya announced the first bidding round for oil exploration in 17 years.
- Kazakhstan has reportedly increased oil & gas condensate production by 13% M/M to a record 2.12mln BPD in February, according to Reuters citing sources.
GEOPOLITICAL
MIDDLE EAST
- Israeli PM Netanyahu said it is time to give Gazans the option to leave.
- Israel's Defence Minister said they are to begin construction of an eastern border fence.
- Israel is to resume the Gaza war in 10 days if the impasse persists, N12 reported.
- Egypt's alternative to US President Trump's Gaza plan aims to sideline Hamas and replace it with interim bodies controlled by Arab and Western states, according to Reuters citing sources.
RUSSIA-UKRAINE
- Ukrainian President Zelensky posted on X "We continue our work with partners. We have already had talks and other steps to come soon."; "It is very important that we try to make our diplomacy really substantive to end this war the soonest possible", while he also stated "We are working together with America and our European partners and very much hope on US support on the path to peace. Peace is needed as soon as possible".
- US President Trump said he will give an update on the Ukraine minerals deal on Tuesday night and doesn't think the Ukraine minerals deal is dead, while he added that Ukrainian President Zelensky should be more appreciative. Furthermore, Trump said he has not talked about suspending military aid to Ukraine.
- US President Trump was earlier reported to hold a Ukraine meeting on the next steps including a possible aid freeze, according to Axios. Furthermore, NYT also noted that President Trump will hold a discussion with his top advisers today to decide whether to cancel or freeze aid to Ukraine.
- US President Trump posted an AP article on Truth titled "Ukraine’s Zelensky says end of war with Russia is ‘very, very far away’"; adds "This is the worst statement that could have been made by Zelensky, and America will not put up with it for much longer".
- US President Trump posted on Truth "The only President who gave none of Ukraine’s land to Putin’s Russia is President Donald J. Trump. Remember that when the weak and ineffective Democrats criticize, and the Fake News gladly puts out anything they say!". Trump separately posted that Europe has spent more money buying Russian oil and gas than they have spent on defending Ukraine.
- US National Security Advisor Waltz told Fox News "We need to hear from Zelensky that he regrets what he did and that he will sign the agreement and commit to the path of stopping the war", while Waltz added our ammunition and weapons are not unlimited.
- US is drawing up a plan to potentially give Russia sanctions relief as President Trump seeks to restore ties with Moscow and stop the war in Ukraine, according to Reuters citing sources.
- US was earlier reported to be hitting the brakes on the flow of arms to Ukraine, according to WSJ. The Trump administration has stopped financing new weapons sales to Ukraine and is considering freezing weapons shipments from US stockpiles, moves that threaten Kyiv's ability to fight at a critical time in its battle against Russian forces, current and former US.
- UK PM Starmer said the Europe plan for Ukraine includes keeping military aid and a peace deal must guarantee Ukraine's sovereignty, while he added a Ukraine-US minerals deal is not enough of a security guarantee on its own.
- UK PM spokesperson said UK Defence Minister Healey is to meet his US counterpart Hegseth for talks this week and only the US can provide ultimate difference to Russian President Putin, while the spokesperson said PM Starmer had 'extensive' Ukraine talks with President Trump at the weekend and a 1-month Ukraine ceasefire is among a 'number of options'.
- European official said US President Trump has less hawkish views than some in his administration on Ukraine, according to Bloomberg.
ASIA-PAC
NOTABLE HEADLINES
- Japan's top currency diplomat Mimura said Japan should increase reliance on foreign investors in the JGB market as the BoJ tapers and the population shrinks.
EU/UK
NOTABLE HEADLINES
- Germany's incoming Chancellor Merz said they haven't discussed a date for convening parliament and it is not clear whether there will be an agreement with SPD ahead of Thursday's summit in Brussels.
- EU's Von Der Leyen will inform EU member states on Tuesday about the rearming Europe plan and the EU will explore direct support for EU battery producers, while it is to grant carmakers leeway in reaching 2025 CO2 targets.
DATA RECAP
- UK S&P Global Manufacturing PMI (Feb) 46.9 (Prev. 46.4)
- German HCOB Manufacturing PMI (Feb) 46.5 vs. Exp. 46.1 (Prev. 46.1)
- French HCOB Manufacturing PMI (Feb) 45.8 vs. Exp. 45.5 (Prev. 45.5)
- Italian HCOB Manufacturing PMI (Feb) 47.4 vs. Exp. 46.6 (Prev. 46.3)
- EU HICP Flash YY (Feb) 2.4% vs. Exp. 2.3% (Prev. 2.5%)
