Global Market Quick Take: Asia – February 26, 2025

Key points:

• Macro: US consumer confidence largest drop of 7 points since August 2021 
• Equities: Tech stocks led the decline with Tesla down 8.1%
• FX: USD weakened due to weak Consumer Confidence Data
• Commodities: WTI fell 2.5%, closing under $69, the lowest this year 
• Fixed income: Treasuries climbed for the fifth straight day 

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Disclaimer: Past performance does not indicate future performance.  

 Macro: 

• US consumer confidence saw its biggest drop since August 2021 this month, amid concerns about the economic outlook and uncertainty over Trump administration policies. The Conference Board's index fell 7 points to 98.3 in February, its third consecutive decline, and below all Bloomberg survey estimates. 
• S&P CoreLogic Case-Shiller 20-city home price index rose 4.5% year-on-year in December 2024, exceeding expectations. New York led with a 7.2% gain, while Tampa fell 1.1%. Since 2020, national home prices have risen 8.8% annually, driven by markets in Florida, North Carolina, Southern California, and Arizona.
• German economy contracted by 0.2% in Q4 2024, after a 0.1% growth in Q3. The decline was mainly due to a 2.2% drop in exports and a 0.5% rise in imports. Household consumption growth slowed to 0.1%, and government spending increased by 0.4%. Fixed investments rose by 0.4%, thanks to a recovery in construction.
• Negotiated wages in the Euro Area rose by 4.12% year-on-year in Q4 2024, down from a 31-year high of 5.43% in the previous quarter, easing pressure on European Central Bank policymakers amid inflation control efforts and slow economic growth.
• UK retail sales volume gauge rose to -23 in February 2025 from -24 in January, exceeding expectations of -25. Challenges include weak demand and higher social security contributions, despite wages outpacing inflation. 

Equities:  

• US - US stocks ended mixed on Tuesday. The S&P 500 fell 0.5% for the fourth straight decline amid economic growth and trade tension concerns. The Nasdaq 100 dropped 1.2%, while the Dow Jones rose by 159 points. Tech stocks were at the forefront of the decline, with Nvidia falling 2.7% ahead of its earnings report, Palantir decreasing by 3.2%, and Tesla plunging 8.1%, which brought its market capitalisation below $1 trillion.
• Super Micro Computer shares surged over 24% in after-hours trading on Tuesday after the server company submitted overdue forms to the Securities and Exchange Commission (SEC) to prevent delisting from the Nasdaq exchange.

Earnings this week:

• Wednesday: Lowe's, NVIDIA, Snowflake, Salesforce, Stellantis
• Thursday: Vistra Energy, Norwegian Cruise Line, Dell, Viatris, Clover
• Friday: FuboTV, Terawulf, Chart Industries, AES, Frontline 

FX:

• USD weakened due to disappointing Consumer Confidence data, consistent with the University of Michigan's report on declining sentiment. Dollar Index (DXY) traded around 106.15. Federal Reserve speakers had minimal impact on the markets, while investors are focusing on the upcoming PCE data on Friday. 
• EUR gained from the dollar's weakness, reclaiming the 1.0520 level. ECB members were active, with Kazaks advising caution as they approach the terminal rate, while Stournaras suggested the ECB should continue cutting rates to 2%, which he believes is likely the terminal rate.
• GBP experienced a slight uptick, trading above 1.2670 level, with gains remaining modest due to limited UK news. However, Prime Minister Starmer announced plans to raise defence spending to 2.5% of GDP by 2027.
• JPY strengthened, causing the USDJPY to briefly trade at the 148.00 level amid a risk-off sentiment and softer US yields.
• Major economic data: US January New home sales

Commodities: 

• Oil prices dropped with equity markets as US consumer confidence fell sharply, fuelling worries about Trump's policies affecting growth and energy demand. WTI declined 2.5%, closing below $69 a barrel, the lowest this year.  
• Gold prices dipped as investors capitalised on profits after another record-breaking session. Nonetheless, prices were still buoyed by increasing optimism about the timing of the next Federal Reserve rate cut and a growing demand for safe-haven assets. 
• Copper futures rose after President Trump ordered the Commerce Department to consider tariffs on the metal. Comex copper futures in New York climbed up to 2.4%, the largest intraday gain since 12th February. 

Fixed income:

• Treasuries rose for the fifth day, pushing benchmark yields to their lowest this year after a larger-than-expected drop in consumer confidence. The rally gained momentum during the European morning after new tariff threats from the Trump administration. US Treasury Secretary Bessent emphasised lowering yields, and the five-year note auction saw strong demand. 10-year yield was at 4.28%, its lowest since 12th December.

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