- US stocks were mostly lower and extended on Friday losses as the pullback from recent ATHs continued, while there were few fresh drivers for the downside although the overhang of tariffs and uncertainty on geopolitics continued to weigh. Sectors were mixed as tech underperformed ahead of NVDA earnings mid-week and amid reports about Microsoft (MSFT) cancelling leases for data centres, which brought into question the large CapEx expectations from the tech sector as they look to bolster AI technology.
- USD eked mild gains after nursing its initial losses and as the deadline of US tariffs on Mexico and Canada (March 4th) looms although there was a lack of firm conviction amid a light calendar and ahead of PCE data later in the week, while the updates from the US centred around trade and geopolitics as President Trump noted that tariffs are going forward and that they're getting very close on the Ukrainian minerals deal.
- Looking ahead, highlights include Japanese Services PPI, Thailand Trade Data, BoK Rate Decision, Supply from Japan.
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LOOKING AHEAD
- Highlights include Japanese Services PPI, Thailand Trade Data, BoK Rate Decision, Supply from Japan.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks were mostly lower and extended on Friday losses as the pullback from recent ATHs continued, while there were few fresh drivers for the downside although the overhang of tariffs and uncertainty on geopolitics continued to weigh. Sectors were mixed as tech underperformed ahead of NVDA earnings mid-week and amid reports about Microsoft (MSFT) cancelling leases for data centres, which brought into question the large CapEx expectations from the tech sector as they look to bolster AI technology.
- SPX -0.50% at 5,983, NDX -1.21% at 21,352, DJI +0.08% at 43,461, RUT -0.78% at 2,178.
- Click here for a detailed summary.
TARIFFS/TRADE
- US President Trump said they are on time with tariffs and that tariffs are going forward, while he added they are on schedule and moving along rapidly. Furthermore, he said all they want is reciprocity and the US will be liquid and rich again.
- US lawmakers are introducing bipartisan legislation to toughen trade enforcement laws and address concerns about China's trade practices, according to Reuters.
- Mexico studies tariffs on China in a bid to strike a deal with US President Trump, while Mexican President Sheinbaum said she sees agreements with the US by Friday and that Mexican officials are in Washington studying possible China levies, according to Bloomberg.
- EU expands tariff list in US President Trump’s looming metals trade dispute.
- EU voiced concern over US President Trump’s warning over its digital rules and said the Digital Markets Act and Digital Services Act don't target firms based on their origin, according to Bloomberg.
- WTO panel is to examine measures adopted by Turkey targeting Chinese EV imports.
NOTABLE HEADLINES
- White House plans to hold tax talks with Congressional leaders, according to Politico.
DATA RECAP
- US Dallas Fed Manufacturing Business Index (Feb) -8.3 (Prev. 14.1)
FX
- USD eked mild gains after nursing its initial losses and as the deadline of US tariffs on Mexico and Canada (March 4th) looms although there was a lack of firm conviction amid a light calendar and ahead of PCE data later in the week, while the updates from the US centred around trade and geopolitics as President Trump noted that tariffs are going forward and that they're getting very close on the Ukrainian minerals deal.
- EUR faded most of its earlier post-election gains and failed to sustain the 1.0500 status, while ING recently noted they remain reluctant to chase EUR/USD beyond 1.05 as a general rule and expect to see a return below 1.04 over the next four weeks citing the looming risk of US tariffs on the EU and the ECB's resolutely dovish stance.
- GBP gradually wiped out its initial gains and trickled lower after stalling just shy of the 1.2700 handle and with BoE's Dhingra suggesting that taking a “gradual” approach would still leave monetary policy as a drag on the economy this year.
- JPY marginally weakened in which USD/JPY edged higher after it recently found support at the 149.00 level.
FIXED INCOME
- T-notes were higher amid a flight to safety as risk sentiment soured.
COMMODITIES
- Oil prices settled in the green on Monday albeit with price action choppy as markets digested Iraq supply, geopolitics and fresh Iran sanctions.
- Iraq’s Oil Minister said Iraq is committed to the OPEC+ decision and exported volumes under the control of the ministry when questioned if the resumption of Kurdish oil exports will affect Iraq's OPEC compliance. It was also reported that Iraq’s Oil Minister spoke with Saudi Arabia’s Energy Minister, Russian Deputy PM Novak and OPEC Secretary General al-Ghais.
GEOPOLITICAL
MIDDLE EAST
- Israel’s army made large-scale preparations for a new and intensive military campaign in Gaza, while the "new Israeli military operations in Gaza will include targeting Hamas officials and destroying buildings and infrastructure that support them" although the plan has yet to be approved by the Israeli cabinet, according to Sky News Arabia citing NYT.
- Senior Israeli official told Axios that the abductee deal is "on the verge of an explosion" against the backdrop of Israeli PM Netanyahu's decision to delay the release of the 600 Palestinian prisoners, although talks are underway to find a solution before the return of the four abductees on Thursday.
- US issued fresh Iran-related sanctions which target individuals linked to the Iranian Oil Terminals Company, according to the Treasury Department website.
RUSSIA-UKRAINE
- Ukrainian President Zelensky said the conversation with G7 leaders was "very good", while he added that Ukraine and the US are working "productively" on an economic deal and hopes to sign it in Washington.
- US President Trump said he could end the war in Ukraine within weeks and would be willing to go to Moscow at an appropriate time but added that May 9th may be too soon for a visit and he would go to Moscow if things get settled. Furthermore, he said Ukraine's land is part of the negotiation and hopes Ukraine can take back some of its land.
- US President Trump said he emphasised the importance of the critical minerals and rare earth deal with Ukraine in meeting with French President Macron, while Trump added that he is in serious discussions with Russian President Putin about ending the war and talks are proceeding very well. Trump earlier said he was talking with French President Macron about trade deals at the White House and reiterated they're getting very close on the Ukrainian minerals deal, while he will meet with Ukrainian President Zelensky either this week or next to sign a minerals deal. Trump later said he had great conversations including with Russia on ending the Ukraine war and the meeting with French President Macron is another step forward towards ending the war.
- French President Macron said Europe is willing to step up to be a stronger partner and do more on defence, while he added that the strength of US re-engagement is a source of uncertainty for Russian President Putin and noted he is willing to provide security guarantees to Ukraine. Macron also commented after speaking with US President Trump, that they have made substantive steps forward during discussions and that Europe has invested USD 138bln in aid to Ukraine, as well as noted that a minerals deal will help guarantee Ukraine's sovereignty and that Europeans are committed, ready and aware they need to do more.
- US and Ukraine are closing in on a minerals agreement worth hundreds of billions of dollars under which the US would express its desire to keep Ukraine "free, sovereign and secure", according to a draft obtained by Axios. The report added that a Ukrainian official said a deal is close and could be signed as soon as Monday, while the document Axios reviewed is the most recent version but could still be amended.
- US will commit to a “free, sovereign and secure” Ukraine and a “lasting peace” as part of a minerals deal that now appears imminent, according to a recent draft text seen by Bloomberg. The report stated the US will agree a “durable partnership” between Washington and Kyiv, while the US will signal an intent to invest in Ukraine and will also say those who “acted adversely” to Ukraine in the war should not “benefit from its reconstruction”.
- Russian President Putin held a meeting on rare earth metals and said Russia would be ready to offer joint work to US public and private entities, while he added that Trump's position is not in Russia's interests and is in Ukraine's interests. Putin also said Russia and the US could consider working together on aluminium production and could think of a joint project with the US in Russia.
- AFP quoted a source that stated the US-Russian meeting in Riyadh on Tuesday is to follow up on the path of ending the conflict in Ukraine, according to Sky News Arabia.
- UN General Assembly adopted the amended US-drafted Ukraine resolution that backs Ukraine's sovereignty and territorial integrity, while it approved all proposed European amendments to the US-drafted resolution on Ukraine and rejected the proposed Russian amendment to the US-drafted resolution on the Ukraine war anniversary.
- Canadian PM Trudeau said they will continue to stand with Ukraine until the war is over and until Ukraine wins, while he hopes this war won't last another year.
- European Council President Costa said Ukraine's succession to the EU would be the most important security guarantee for the future of Ukraine.
- EU Commission President von der Leyen said Ukraine could join the EU before 2030 if they continue at the current speed and quality.
- EU and UK are to discuss a Europe-wide defence fund amid fear of US pullback, according to FT. It was separately reported that Germany is discussing EUR 200B in emergency defence spending, according to Bloomberg.
- UK government sanctions package targets Russian military supply chains and revenues fuelling Russian President Putin's illegal war, as well as kleptocrats driving profits from the Kremlin.
ASIA-PAC
NOTABLE HEADLINES
- China’s economic growth target is expected to be set at about 5% for 2025, while CPI will probably be lowered to 2% from 3% for previous years, according to a report in Securities Times citing economists.
EU/UK
NOTABLE HEADLINES
- BoE's Dhingra was reappointed to the MPC, while she said they are already at a high level of monetary policy restrictiveness and that medium-term inflation pressures are easing. Dhingra added that food prices are ticking up, but they are not seeing the same rise in import costs as before. Furthermore, she said everyone on the MPC has a different definition of the pace of rate cuts implied by "gradual" and her definition of gradual rate cuts does not mean 25bps per quarter, while she added if you cut rates by 25bps at a quarterly pace, you will still be in restrictive territory all of this year.
- Germany's CDU Leader Merz said he wants to build a coalition with the SPD and will start talks in the coming days, while he added that Europeans must quickly be capable of acting, especially with an eye to defence and noted that AFD's strong support is a final warning to democratic parties to work together. It was separately reported that Merz is in talks with the SPD to rush through defence spending, according to Bloomberg.
DATA RECAP
- German Ifo Expectations (Feb) 85.4 vs. Exp. 85.0 (Prev. 84.2)
- German Ifo Current Conditions (Feb) 85.0 vs. Exp. 86.3 (Prev. 86.1)
- German Ifo Business Climate (Feb) 85.2 vs. Exp. 85.8 (Prev. 85.1)
