Global Market Quick Take: Asia – March 19, 2025

Key points:  

• Macro: Germany approves historic borrowing package 
• Equities: BYD hits new record high with new fast-charging tech
• FX: JPY rebounded from lows as USDJPY retreated before BoJ policy announcement 
• Commodities: Gold hit a new record, surpassing $3,030 
• Fixed income: Treasuries were choppy ahead of FOMC meeting

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Disclaimer: Past performance does not indicate future performance.  

 Macro:  

• Germany's outgoing parliament approved a major increase in government borrowing, including an overhaul of debt rules. The CDU/CSU bloc, SPD, and Greens secured a deal exempting defence spending from debt limits and establishing a €500 billion infrastructure plan. It now awaits a vote in the Bundesrat on Friday. 
• U.S. import prices increased by 0.4% in February 2025, surpassing expectations. Fuel prices rose by 1.7%, while nonfuel import prices went up by 0.3%, driven by higher costs for industrial supplies and consumer goods. 
• Canada's inflation rate rose to 2.6% in February 2025, the highest in eight months, exceeding expectations. The increase was driven by the end of GST and HST (harmonized sales tax) breaks, raising prices of eligible goods. Inflation slowed for restaurants and alcoholic beverages, causing a rebound in the food subindex. 
• U.S. industrial production increased by 0.7% in February 2025, surpassing expectations. Manufacturing output rose by 0.9%, driven by an 8.5% jump in motor vehicles and parts, while other manufacturing increased by 0.4%. 

Equities:  

• US - Wall Street saw renewed selling on Tuesday, pulling major indices down. The S&P 500 fell 1.1%, nearing correction territory; the Dow dropped 260 points; and the Nasdaq 100 sank 1.6% amid tech sector pressure. Tesla declined 5.3% after RBC Capital Markets cut its price target due to increased EV competition. Alphabet shares decreased 2.3% following Google's $32 billion acquisition of cloud security firm Wiz. Nvidia and Palantir also lost 3.4% and 4%, respectively.
• EU - European stocks climbed for the third session on Tuesday, approaching March's record highs. The STOXX 50 rose 0.7% to 5,485, and the STOXX 600 gained 0.6% to 554. Germany's CDU/CSU, SPD, and Greens approved a €500 billion spending package for defence and infrastructure, marking a historic debt rise. The DAX outperformed peers, rising 1% to 23,381, driven by gains in auto stocks such as Mercedes-Benz (2.2%), BMW (1.8%), VW (1.1%), and Continental (1.3%). Financials also rallied, with Allianz, Deutsche Bank, and Commerzbank gaining 1.4% to 4.2%.
• HK - HSI rose 2.5%, to a three-year high of 24,740, driven by broad sector gains. The tech index led with a 4% jump, following Nasdaq Golden Dragon China Index gains. BYD Co. hit a record with new fast-charging technology, Baidu surged 12.2% with new AI models, and Alibaba and Tencent rose 5.5% and 3.0%, respectively. Consumer and financial sectors benefited from strong early 2025 spending and record foreign inflows in February. 

Earnings this week: 

• Wednesday: General Mills, Williams-Sonoma, Signet Jewelers, Five Below, Kingsoft Cloud, Tencent
• Thursday: Nike, Accenture, FedEx, Micron Technology, Pinduoduo
• Friday: NIO, Carnival Corporation, MiniSO Group, Soy Good, Zeekr, Torrid

FX: 

• USD weakened to 103.19 amid focus on data, Trump-Putin talks, and the upcoming FOMC meeting. Strong housing and industrial production data led to an improved Atlanta Fed GDPNow forecast. Treasury Secretary Bessent discussed non-automatic reciprocal tariffs and potential stacking on steel and aluminium.
• EUR saw mild strengthening to 1.0940 during a volatile day after Germany's Bundestag approved the fiscal reform package, which had little effect on the currency.
• GBP made slight gains against the dollar, nearly reaching 1.30. This week, attention is on Thursday's jobs data and the BoE's rate decision. While wage growth and labour market trends are key, they are unlikely to influence the BoE's expected unchanged rate decision, anticipated to be a 7-2 vote split.
• AUD fell to 0.6345 amid declining risk sentiment. RBA Assistant Governor Hunter noted the board's February statement showed more caution about further easing than the market anticipated.
• JPY weakened but recovered from its lowest levels as USDJPY pulled back from near 150 ahead of the BoJ's policy announcement on Wednesday.
• CAD hit a three-week high of 1.43 against USD as inflation rose to 2.6% in February, and U.S.-Canada trade talks showed progress with preliminary agreements on reducing retaliatory tariffs.
• Major economic data: BoJ Interest Rate Decision, Fed Interest Rate Decision, FOMC Economic Projections, Fed Press Conference

Commodities: 

• Oil prices stayed down due to rising US crude stockpiles and geopolitical concerns, with Brent near $70 and WTI below $67. Nationwide inventories rose by 4.6 million barrels, according to the American Petroleum Institute. 
• Gold reached a record high above $3,030 an ounce due to rising Middle East tensions and concerns about the slowing US economy. The price increased by 1.3% as Israel's airstrikes in Gaza ended a nearly two-month ceasefire. 
• Copper rose for the second day amid geopolitical risks and a weakening dollar. Vladimir Putin agreed to limit attacks on Ukrainian energy infrastructure for 30 days but rejected a broader ceasefire. 

Fixed income:  

• Treasuries rose, reversing early losses from high US import prices and Canadian CPI. Gains were boosted by strong demand in the 20-year bond auction, yielding 1.4 basis points lower than expected. Overnight-indexed swaps suggest the Federal Reserve and Bank of Japan will keep their policy rates unchanged, with focus on Governor Kazuo Ueda’s briefing at 3:30 pm Tokyo time.

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