- US stocks closed largely in the red on what was a choppy session with a notable sell-off into the close amid a chunky market imbalance, while markets fluctuated during the session with initial significant risk-off sentiment amid US growth concerns which was further exacerbated by a poor RCM/TIPP economic optimism print and after the implementation of Trump tariffs on China, Mexico, Canada which spurred the announcement of retaliatory measures. Nonetheless, stocks then staged an intraday recovery before suffering another bout of selling heading into the close.
- USD was weighed on by continued US growth concerns following the recent series of soft US data releases which has been translated into money markets pricing 73bps of cuts by year-end, while the recent implementation of US tariffs on China, Mexico, and Canada provided short-lived gains for the greenback as participants remained focused on growth concerns and after the announcement of retaliatory measures against the US's latest tariffs. Nonetheless, Commerce Secretary Lutnick later suggested that President Trump could roll back tariffs on Canada and Mexico on Wednesday.
- Looking ahead, highlights include Australian Services PMI, AiG Manufacturing & Construction Indexes, South Korean Final Q4 GDP, Australian GDP, Chinese Caixin Services & Composite PMIs, China NPC, Speech from BoJ Governor Ueda & US President Trump Addresses a Joint Session of Congress, Supply from Australia.
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LOOKING AHEAD
- Highlights include Australian Services PMI, AiG Manufacturing & Construction Indexes, South Korean Final Q4 GDP, Australian GDP, Chinese Caixin Services & Composite PMIs, China NPC, Speech from BoJ Governor Ueda & US President Trump Addresses a Joint Session of Congress, Supply from Australia.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks closed largely in the red on what was a choppy session with a notable sell-off into the close amid a chunky market imbalance, while markets fluctuated during the session with initial significant risk-off sentiment amid US growth concerns which was further exacerbated by a poor RCM/TIPP economic optimism print and after the implementation of Trump tariffs on China, Mexico, Canada which spurred the announcement of retaliatory measures. Nonetheless, stocks then staged an intraday recovery before suffering another bout of selling heading into the close.
- SPX -1.22% at 5,778, NDX -0.36% at 20,353, DJI -1.55% at 42,521, RUT -1.08% at 2,080.
- Click here for a detailed summary.
TARIFFS/TRADE
- US President Trump posted on Truth "Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by a like amount!". Trump separately commented that Canada does not allow American banks to do business in Canada but their banks flood the American market which does not seem fair.
- US Commerce Secretary Lutnick said he thinks US President Trump will meet Mexico and Canada in the middle on tariffs and they're going to probably be announcing that tomorrow, while he added if USMCA rules are followed, Trump is considering relief, according to a Fox Business interview. Lutnick also said that President Trump is to move with Canada and Mexico but not all the way and that Trump may roll back Canada and Mexico tariffs tomorrow.
- US Commerce Secretary Lutnick earlier reiterated that the current tariff policy is drug-related policy and that a tariff study will be completed on April 2nd, while he added President Trump will have all the tools at his disposal to make a decision, according to CNBC. Lutnick said Canada and Mexico have abused their trade relationship and it is not a trade war, but April 2nd will be a trade reset and will be discussing how trade policy is going to change.
- US Treasury Secretary Bessent said China's business model is to export and that is unacceptable and he is highly confident that Chinese manufacturers will eat the tariffs, according to Fox News.
- Canadian PM Trudeau said they will not back down from a fight and that Canada will be imposing 25% tariffs on US imports worth CAD 30bln with immediate effect and on a further CAD 125bln of US imports in 21 days' time. Furthermore, he said they will challenge US tariffs through the WTO and USMCA, while he added that if US tariffs persist, Canada will also look at non-tariff measures.
- Ontario Premier said if tariffs persist, they will immediately apply a 25% surcharge on the electricity they export to New York, Michigan, and Minnesota.
- Mexican President Sheinbaum said Mexico took measurable steps to fight fentanyl trafficking and crime, while she called the White House's comments on Mexico’s government offensive and categorically denied them. Sheinbaum also said they will announce countermeasures against the US on Sunday and noted that US tariffs are violating the trilateral North American trade pact and the legal aspect of the USMCA treaty violation should be addressed.
- China's Commerce Ministry announced that it has launched an anti-circumvention investigation into certain optical fibre products imported from the US, according to Xinhua.
- China's Customs suspended imports of US lumber effective immediately and suspended soybean import qualification for three US companies from Tuesday including CHS (CHSCO), Louis Dreyfus Company and EGT (BG).
NOTABLE HEADLINES
- Fed's Williams (Vice Chair) said he doesn't see the need to change the policy rate right now and monetary policy is in a good position which can be adjusted as needed. Williams added that monetary policy is still restrictive and has the right balance right now and it is really hard to know what the Fed will do with rates this year, while it is worth watching UoM inflation expectations data.
- US Treasury Secretary Bessent said they are set on bringing interest rates down, according to Fox News.
- US Speaker Johnson said continuing resolution text will come out at the end of the weekend, according to Punchbowl.
DATA RECAP
- US IBD/TIPP Economic Optimism (Mar): 49.8 (Exp. 53.1, Prev. 52.0)
- US Redbook YY 6.6% (Prev. 6.2%)
FX
- USD was weighed on by continued US growth concerns following the recent series of soft US data releases which has been translated into money markets pricing 73bps of cuts by year-end, while the recent implementation of US tariffs on China, Mexico, and Canada provided short-lived gains for the greenback as participants remained focused on growth concerns and after the announcement of retaliatory measures against the US's latest tariffs. Nonetheless, Commerce Secretary Lutnick later suggested that President Trump could roll back tariffs on Canada and Mexico on Wednesday.
- EUR gained amid potential prospects of increased European defence spending overshadowing concerns over the global trade war in which Europe is a clear target of the Trump administration, while European yields experienced another boost in early trade after EU Commission President von der Leyen proposed a new instrument that will provide EUR 150bln of loans for defence spending.
- GBP benefitted from the broad dollar weakness which lifted GBP/USD to just shy of the 1.2800 territory.
- JPY was ultimately softer on the day with USD/JPY regaining a firm footing at the 149.00 handle after staging a recovery in tandem with the rebound in risk appetite.
FIXED INCOME
- T-notes declined and the curve steepened with pressure seen in tandem with an intraday rebound in stocks and with a slide also seen in Bunds after comments from Germany's CDU leader Merz who said Germany plans a reform of the debt brake and announced a credit-financed special fund worth EUR 500bln.
COMMODITIES
- Oil prices were lower but settled well off their lows, as they continued to be weighed on by Monday’s OPEC+ decision to go ahead with April’s output hike and the initial risk-off sentiment.
- Private inventory data (bbls): Crude -1.5mln (exp. +0.3mln), Distillate +1.1mln (exp. +0.2mln), Gasoline -1.2mln (exp. -0.4mln), Cushing +1.6mln.
- Talks between Iraq and oil companies over the resumption of Kurdish oil exports were pushed back to Thursday after financial disputes.
- Kazakhstan's Energy Minister reaffirmed commitments to the OPEC+ deal and intends to speed up compensation action. Kazakhstan Energy Ministry said they plan to increase oil exports via the Caspian CPC pipeline by 12% in March vs Feb to 6.7mln tons.
GEOPOLITICAL
MIDDLE EAST
- Senior Hamas official Zuhri said the weapon of resistance is a red line and is not up for negotiation and they will not accept to trade it for reconstruction or entry of aid, according to Reuters.
- Russian President Putin agreed to act as a mediator between Iran and the US, according to Zvezda citing the Kremlin. It was also reported that a Kremlin aide said Iran was discussed at Russia-US talks in Riyadh and that Russia and the US agreed to hold separate talks on Iran, according to Interfax.
- US Secretary of State Rubio said the US is designating the Houthis as a foreign terrorist organisation.
RUSSIA-UKRAINE
- Ukrainian President Zelensky reiterated Ukraine's commitment to peace and said he is ready to come to the negotiating table ready to work under Trump's strong leadership to bring peace. Zelensky said he is ready to sign a minerals and security deal any time, in any convenient format and that the first stages of an end to the war could include the release of prisoners and an immediate truce in the sky and sea if Russia does the same.
- US and Ukraine plan to sign minerals deal and President Trump has told advisers he wants to announce the Ukraine minerals deal during Tuesday's speech to Congress, according to sources cited by Reuters although they cautioned that the deal had yet to be signed and the situation could change.
- White House spokesperson said President Trump wants to reach a metals deal with Ukraine and it is unfortunate that Ukraine's President Zelensky is unwilling to discuss a peace deal.
- UK PM Spokesman said PM Starmer spoke to US President Trump on Monday to discuss Ukraine and Starmer and Trump are aligned on securing a secure and lasting peace in Ukraine.
OTHER
ASIA-PAC
NOTABLE HEADLINES
- Japanese Industry Minister Muto is likely to travel to the US as soon as March 10th to meet US Commerce Secretary Lutnick and the USTR, according to Asahi.
- TikTok plots a local services expansion to the US, according to Axios.
EU/UK
NOTABLE HEADLINES
- UK Chancellor Reeves said she will announce an intention to reduce unnecessary red tape which slows down the procuring of defence equipment. Reeves also said it won't be easy to secure a US trade deal, but they have every reason to be hopeful.
- EU Commission President von der Leyen said Europe is ready to "massively" boost defence spending and will propose to activate the national escape clause of the stability and growth pact.
- Germany's CDU leader Merz said Germany plans reform of the debt brake and the first results have been reached in talks with SPD and a special fund is to be presented next week. Merz also said they will propose a new instrument that will provide EUR 150bln of loans, while he added the economy must be brought back on the growth path with a credit-financed special fund worth EUR 500bln and all defence spending above 1% of GDP would be exempt from debt brake restrictions.
- German Bundesbank proposed increasing the government's borrowing capacity to 1.4% of GDP from 0.35% (as long as debt is below 60% of GDP).
DATA RECAP
- EU Unemployment Rate (Jan) 6.2% vs. Exp. 6.3% (Prev. 6.3%, Rev. 6.2%)
