Global Market Quick Take: Asia – February 28, 2025

Key points:

• Macro: Trump reaffirms tariffs will take place next week with additional 10% on China 
• Equities: Equities selloff after confirmation of tariffs 
• FX: USD strengthened amid tariff concerns 
• Commodities: Oil prices saw their biggest increase in six weeks 
• Fixed income: Treasuries bear steepen as short end yield falls 

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Disclaimer: Past performance does not indicate future performance.  

 Macro:  

• President Trump reaffirmed that 25% tariffs on Canada and Mexico will take effect next week and announced plans for an additional 10% tax on Chinese imports.
• US pending home sales fell 4.6% in January 2025, following a revised 4.1% decline in December 2024, pushing the index to a record low of 70.6, below the expected 1.3% drop. 
• US durable goods orders rose 3.1% to $282.3 billion in January 2025, exceeding expectations of a 2% increase, following a revised 1.8% drop in December. The rebound was driven by a 9.8% surge in transportation equipment, especially nondefense aircraft and parts (93.9%). 
• US initial jobless claims rose by 22,000 to 242,000 in the third week of February, exceeding expectations of 221,000. Meanwhile, continuing claims fell by 5,000 to 1,862,000 in the second week, below the expected 1,870,000. 
• Tokyo's core CPI rose 2.2% year-on-year in February 2025, down from 2.5% in January and below the 2.3% forecast. Despite this slowdown, inflation remains above the Bank of Japan's 2% target for the fourth month, supporting a hawkish monetary policy outlook. 

Equities:  

• US - Equities fell sharply on Thursday, led by a tech selloff. The S&P 500 dropped 1.6%, Nasdaq 100 fell 2.7%, and Dow lost 192 points. Nvidia's 8.5% decline after earnings pressured the market. Sentiment worsened with President Trump's confirmation of 25% tariffs on European autos and new levies on Mexico and Canada from March 4. Salesforce fell 2.9% on weak guidance, and Uber dropped 2.3% amid reports of Tesla (-3.1%) seeking approval for a California ride-hailing service.

• EU - European stocks fell sharply after Trump's 25% tariff announcement on EU imports. The STOXX 50 dropped 1%, and the STOXX 600 fell 0.5%. Autos and tech stocks led losses, with Stellantis, Mercedes, BMW, and ASML declining. ECB hints at further rate cuts.
• HK - HSI dropped 0.3% to 23,718, retreating from a three-year high due to tech and consumer stock declines. Geopolitical tensions rose with China's military drills near Taiwan. China plans a CNY 400 billion bank injection. Xiaomi fell 6.1% China Unicom 5.5%, Trip.com 5.0%, and Kuaishou Tech 3.8%.

Earnings this week: 

• Friday: FuboTV, Terawulf, Chart Industries, AES, Frontline 

FX: 

• USD strengthened amid tariff concerns. Tariffs on Canada and Mexico start March 4th; China faces an additional 10% tariff. Mixed economic data: Q4 GDP unchanged, Core PCE stronger, and Initial Jobless Claims rose. Focus shifts to Friday's PCE data.
• GBP weakened against the USD, testing 1.26 level, but declined less than other G10 currencies due to perceived lower UK tariff exposure. Trump mentioned a quick UK trade deal and that PM Starmer urged against UK tariffs during their meeting.
• EUR weakened against the stronger dollar, with EURUSD falling below $1.04, as President Trump criticised EU VAT taxes and announced plans for reciprocal tariffs, expressing dissatisfaction with how EU treats US companies.
• AUD fell below $0.625, affected by Trump's tariff plans and global trade war risks. Unexpected Q4 capital expenditure decline raised rate cut expectations, but RBA's Hauser said more positive inflation data is needed before further cuts.

• Major economic data: Germany inflation rate, Canada GDP growth rate, US core PCE price index, US personal income, US personal spending

Commodities: 

• Oil prices surged the most in six weeks as Trump confirmed tariffs on the US's top crude suppliers. WTI futures rose about 2.5%, settling above $70 a barrel, after Trump's social media announcement of tariffs on Canada and Mexico effective March 4. 
• Gold prices declined as the dollar strengthened after Trump confirmed 25% tariffs on Canada and Mexico, along with an additional 10% tax on Chinese imports. Bullion fell by up to 1.7% as the stronger dollar made gold less appealing to foreign investors. 

Fixed income:  

• Treasuries saw bear steepening, with the long end of the curve about 4 basis points cheaper, widening the 2s10s and 5s30s spreads by the session's close. Despite no major price catalyst following a two-day rally, early losses persisted after GDP data and jobless claims. US 10-year yields underperformed core European rates, with the long end leading the decline.

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