- US stocks closed mostly lower with the declines led by the Nasdaq again amid underperformance in telecommunications and tech heading into Nvidia's earnings, while the energy sector was among the worst hit as oil prices fell and risk appetite was also sapped by disappointing US Consumer Confidence data which fell to beneath the most pessimistic of analysts' expectations.
- USD was pressured following weak US Consumer Confidence data which printed below analysts' forecasts range and was in fitting with the theme seen from UoM on Friday of consumer confidence turning dim. There were several Fed speakers although provided little to shift, while the PCE data on Friday remains a key focus for markets.
- Looking ahead, highlights include Australian Monthly CPI & Construction Work Done, Japanese Leading Index & BoJ Core CPI, Singapore Industrial Production, Supply from Australia, Indian Holiday Closure.
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LOOKING AHEAD
- Highlights include Australian Monthly CPI & Construction Work Done, Japanese Leading Index & BoJ Core CPI, Singapore Industrial Production, Supply from Australia, Indian Holiday Closure.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks closed mostly lower with the declines led by the Nasdaq again amid underperformance in telecommunications and tech heading into Nvidia's earnings, while the energy sector was among the worst hit as oil prices fell and risk appetite was also sapped by disappointing US Consumer Confidence data which fell to beneath the most pessimistic of analysts' expectations.
- SPX -0.47% at 5,995, NDX -1.24% at 21,087, DJIA +0.37% at 43,621, RUT -0.38% at 2,170.
- Click here for a detailed summary.
TARIFFS/TRADE
- US Treasury Secretary Bessent said they will be examining China's non-tariff barriers and currency policies in reciprocal tariff analysis, while he commented regarding Australia "so far so good". Bessent added that President Trump wants to diversify sourcing and processing of critical minerals and Australia can play a role.
- USTR announced a proposal for new port fees targeting Chinese shipping companies and vessels, according to Flexport.
- US Commerce Secretary Lutnick said will investigate possible imposition of tariffs to rebuild the US copper industry, while he added no exemptions, no exceptions and that it's time for copper to come home. Lutnick stated the investigation will look at raw mined copper, copper concentrates, refined copper, copper alloy, scrap copper and derivative products but noted it is premature to discuss any levels of tariffs.
- US Trade Adviser Navarro said negotiations are ongoing regarding Canada and Mexico tariffs and if they don't get progress, President Trump will do tariffs, while he stressed the need to stop fentanyl and said they will set reciprocal tariffs for digital services tax. Navarro added that digital services taxes are about fairness and not about helping Amazon (AMZN) and Meta (META), while he denied an FT report on cutting Canada from Five Eyes.
- Mexican President Sheinbaum said there have been no trade conflicts with the US that could derail a potential deal ahead of next week's tariff deadline. Mexican President Sheinbaum earlier said she aims to close a tariff deal by next Tuesday and that her Plan B remains in place in the event that the US hits tariffs on Mexican goods next week.
NOTABLE HEADLINES
- Fed's Barr (Vice Chair Supervision) said monetary policy is 'inextricably' tied to stability and now is the time to look at risks to financial stability.
- Fed's Barkin (2027 voter) said uncertainty argues for caution in the last stages of the inflation fight and policy should remain modestly restrictive until there is more confidence inflation will return to target. Barkin said expect upcoming PCE will show a further decline and that the Fed has made a lot of progress, while he will take a wait-and-forecast approach about how coming policy changes impact the economy. Furthermore, Barkin said business and consumer confidence matter a lot and that so far, small business confidence has been up, which might be good for hiring.
- Fed's Logan (2026 Voter) said once quantitative tightening ends, it would make sense to overweight purchases of shorter-dated securities and floated the idea of a discount window loan facility.
- US Treasury Secretary Bessent said the US economy is brittle underneath due to excessive spending by the Biden administration and that job growth in recent years has been concentrated in the government and government-adjacent sectors. Bessent said will produce a list of industries that need to have secure supply chains including chips and medicines, while he also said they are focused on increasing the desirability of treasuries.
- White House Press Secretary said US President Trump is looking at the House and Senate budget proposals.
- US House Speaker Johnson said the House will vote on a budget resolution on Tuesday, according to Punchbowl's Sherman. However, Johnson later said there may not be a vote later on Tuesday.
DATA RECAP
- US Consumer Confidence (Feb) 98.3 vs. Exp. 102.5 (Prev. 104.1)
- US Rich Fed Comp. Index (Feb) 6.0 (Prev. -4.0)
- US Rich Fed Mfg Shipments (Feb) 12.0 (Prev. -9.0)
- US Rich Fed, Services Index (Feb) 11.0 (Prev. 4.0)
- US CaseShiller 20 MM SA (Dec) 0.5% vs. Exp. 0.3% (Prev. 0.4%)
- US CaseShiller 20 YY NSA (Dec) 4.5% vs. Exp. 4.4% (Prev. 4.3%)
- US Monthly Home Price YY (Dec) 4.7% (Prev. 4.2%, Rev. 4.5%)
FX
- USD was pressured following weak US Consumer Confidence data which printed below analysts' forecasts range and was in fitting with the theme seen from UoM on Friday of consumer confidence turning dim. There were several Fed speakers although provided little to shift, while the PCE data on Friday remains a key focus for markets.
- EUR benfitted from the dollar weakness and reclaimed the 1.0500 status, while ECB members were active with Kazaks noting they must be cautious as they are near the end of the terminal rate and Stournaras said the ECB should keep cutting to 2% which he believes is likely the terminal rate.
- GBP edged higher but with gains only mild amid little newsflow for the UK although PM Starmer announced to increase defence spending to 2.5% of GDP by 2027.
- JPY strengthened which saw USD/JPY briefly trade with a 148.00 handle amid the risk-off mood and softer US yields.
FIXED INCOME
- T-notes rallied into month-end with more downbeat consumer data supporting prices.
COMMODITIES
- Oil prices tumbled as soft consumer confidence data added fears to the demand side of the equation.
- Iran and BP (BP / LN) signed an oil and gas deal to develop four Kirkuk fields, according to a statement seen by Reuters.
- Nigeria LNG CEO said it is only operating 2 out of 6 production trains amid sabotage on major gas pipelines.
- Chile's state-owned copper miner Codelco said a power outage has affected all of its mines, while Chile's Interior Minister Carolina Toha said the power outage was caused by a transmission line failure in Norte Chico in Northern Chile and electricity will start coming back in the coming hours.
GEOPOLITICAL
MIDDLE EAST
- A senior Israeli official told Axios that the crisis in the hostage deal over the release of Palestinian prisoners is "on the verge of being resolved", while the official said that this was a "completely unnecessary crisis" created by Netanyahu's decision.
- Iran's Foreign Minister Araghchi discussed the nuclear programme with Russian Foreign Minister Lavrov and discussions will continue, while he said there will be no direct US talks if the "maximum pressure" stance remains.
- Russian Foreign Minister Lavrov said they are sure diplomatic measures are still on the table with regard to the Iranian nuclear programme.
- US Envoy Witkoff has postponed his trip to the Middle East by several days due to diplomatic efforts on Russia and Ukraine, according to Axios.
RUSSIA-UKRAINE
- Ukrainian President Zelensky intends to visit the US on Friday on a resources deal, according to Bloomberg.
- Kyiv has agreed terms with Washington on the minerals deal that Ukrainian officials hope will improve relations with the Trump administration and pave the way for a long-term US security commitment, according to FT.
- Ukraine's cabinet is expected to recommend a US critical minerals deal to be signed on Wednesday, according to Bloomberg.
- Ukraine's business community said they expect Ukrainian President Zelensky to take the deal US President Trump is offering to end the conflict, according to FBN's Gasparino citing sources but added that the situation is fluid.
- White House Press Secretary said US President Trump expects Ukrainian President Zelensky to sign the minerals deal.
- Russia's Kremlin said President Putin is "okay" with European peacekeepers in Ukraine referring to an earlier statement that such a move would be unacceptable, while it said many steps need to be taken to restore trust between the US and Russia.
OTHER
- White House Press Secretary said US President Trump is in opposition to the Maduro government in Venezuela.
ASIA-PAC
NOTABLE HEADLINES
- China's MOFCOM urged the EU to stop listing Chinese enterprises in sanctions and to cease spreading false accusations against China, while it added that China will take necessary measures to firmly protect the legitimate rights and interests of Chinese enterprises.
- DeepSeek is said to be speeding up the launch of its R2 AI model which was initially planned for May and is now looking to roll it out as soon as possible, according to Reuters sources.
EU/UK
NOTABLE HEADLINES
- UK PM Starmer said they will begin to increase defence spending with the biggest sustained increase since the end of the Cold War to 2.5% of GDP by 2027 and thereafter, increase by GBP 13.4bln/year with a goal of 3% of GDP in the next parliament.
- UK PM Starmer said an increase in defence spending is an opportunity to rebuild Britain's industrial base and investment will maximise British jobs and growth. Starmer said he spoke to French President Macron and will host a number of leaders for a meeting on Sunday.
- German CDU leader Merz said talks with the SPD have already commenced and is optimistic that they can conclude by Easter, while Merz also said that debt brake reform is ruled out in the near future and it is a complex task.
- EU's Von Der Leyen said the EU should 'enable' more targeted and efficient defence spending through a designated European instrument, while the instrument should focus on capabilities 'of European strategic interest' such as air defence, deep and precision strike, drones and others.
- ECB's Kazaks said he thinks they have to continue cutting rates and will take rate cuts "step by step", while he added the rate path is to hinge on Trump policies and must be cautious as they near the end of the terminal rate.
- ECB's Nagel said "can't say today that rates are no longer restrictive" and noted that rates below neutral are not a discussion for now.
- ECB's Schnabel said a higher r-star calls for careful monitoring of when monetary policy ceases to be restrictive and a cautious approach to easing, while she added it is becoming increasingly unlikely that current financing conditions are materially holding back consumption and investment, as well as noted the fact that growth remains subdued cannot and should not be taken as evidence that policy is restrictive.
- ECB's Stournaras said it's too early to discuss pausing cuts and the ECB should keep cutting rates to 2%, while he added it is definitely still restrictive and the terminal rate is likely to be 2%.
DATA RECAP
- ECB Euro Area Indicator of Negotiated Wage Rates (Q4) 4.12% (prev. 5.43%)
