Global Market Quick Take: Asia – April 4, 2025

Key points:

• Macro: Trump announces a minimum of 10% tariffs on all imports
• Equities: S&P 500 lost 4.8%, Nasdaq 100 down 5.4%, with Apple cratering 9%
• FX: Dollar Index fell to 101.8; CHF and JPY rose over 2% due to safe-haven flow
• Commodities: Bloomberg Commodity Spot Index had largest drop since December 2022
• Fixed income: 5y30y yield curve steepens to widest level since November 2021

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• Trump imposed a 10% tariff on all imports, with higher rates for key trading partners, raising concerns about global retaliation and economic stability. He later showed openness to trade negotiations, contradicting his aides. Markets are now awaiting NFP report later for insights into the Federal Reserve's monetary policy.
• US ISM Services PMI fell to 50.8 in March 2025 from 53.5 in February, below the forecast of 53, marking the weakest expansion since last June. New orders, inventories, and supplier deliveries slowed, while employment contracted sharply. Backlogs of orders showed contraction again. Production rose and price pressures eased.
• Continuing jobless claims in the US rose by 56,000 to 1,903,000 in the week ending March 22, the highest since November 2021, surpassing the forecast of 1,860,000, indicating challenges for unemployed individuals reentering the workforce. Meanwhile, initial jobless claims fell by 6,000 to 219,000, below expectations of 225,000.
• In February 2024, household spending in Japan decreased by 0.5% year-on-year, contrasting with a 0.8% rise in January and below estimate of –0.8%. This marked the first decline since November and was better than market expectations of a 1.7% decrease.
• Canadian PM Carney announced 25% tariffs on non-compliant US vehicle imports under the USMCA and vowed to contest US tariffs until removed. He affirmed existing retaliatory tariffs and promised a strong response to any new US tariffs, emphasizing the need to reset relations with the US.

Equities:

• US - US equities suffered their biggest drop in over two years on Thursday, with major indexes experiencing sharp losses. The S&P 500 fell 4.8%, losing about $2 trillion in market value, its largest decline since 2020. The Dow dropped nearly 1,680 points, and the Nasdaq 100 fell 5.4%. Concerns over President Trump’s tariff plan, which may provoke global retaliation and hinder economic growth, unsettled investors. Tech stocks, including Apple (-9%) and Nvidia (-7.8%), led the downturn, while major retailers like Nike (-13%) and Dollar Tree (-13.3%) also saw double-digit declines. Despite the significant drops, the sell-off remained orderly, though worries about inflation and volatility persisted.
• EU - European stock markets dropped sharply on Thursday following Trump's unexpected tariff announcement. The Stoxx 50 decreased by 3.7%, the Stoxx 600 by 2.7%, and the DAX by around 3% to 21,700, marking its largest daily fall since July 2024. Companies with global supply chains took a hit, with Adidas down 11% and Maersk 9.5%. Auto stocks fell 3.9% due to Trump's 25% tariff on imported vehicles, alongside existing steel and aluminium duties. Banks fell 5.6%, tech stocks 4.5%, while utilities gained nearly 3% in market uncertainty. Trump's "reciprocal tariffs" include a 20% tax on EU imports and 10% on UK goods. EU leaders, including Ursula von der Leyen and Emmanuel Macron, cautioned about retaliatory measures, urging firms to rethink U.S. investments.
• HK - HSI fell 1.2%, to 22,933 after Trump's steeper-than-expected tariffs announcement. Investors shifted from risk assets, hitting a one-month low. Tech stocks dropped 1.7% as China and Taiwan faced tariffs over 30%. Citigroup warned of reduced GDP and export growth for China, increasing economic concerns. Hong Kong stock market is closed on Friday.

Earnings this week:
Friday: Acuity Brands, Lindsay Corporation, RenovoRx, Simulations Plus, FranklinCovey.

FX:

• USD fell after President Trump's aggressive tariff announcement, sparking recession concerns. Bank of America and Barclays warned of potential economic downturns. Despite several data releases, focus remained on tariffs. DXY fell below 101.8.
• EUR gained significantly over 1.10 level due to the USD's decline following the tariff announcement. Services PMI data from the eurozone exceeded forecasts, and officials, including Spain's Prime Minister, responded to Trump's tariffs by urging the European Commission to strengthen global trade links and announcing a EUR 14.1 billion plan to safeguard the Spanish economy.
• GBP strengthened during the day but retreated from its intraday highs after encountering resistance at the 1.32 level.
• CHF rose to below 0.86 against USD, its highest since October 2024, as investors turned to safe-haven assets after Trump's aggressive tariffs.
• JPY appreciated due to safe-haven flows, briefly pushing USDJPY below the 146 level.
• Major economic data: UK Unemployment Rate, Canada Unemployment Rate, US Non Farm Payrolls, US Unemployment Rate, US Fed Chair Powell Speech

Commodities:

• Oil prices dropped after Trump's tariffs and OPEC+'s decision to increase output. Brent crude fell to around $70 a barrel, and WTI dropped below $67. OPEC tripled its output hike for May to lower prices and penalise members exceeding quotas.
• Gold steadied after falling from a record high, impacted by global market pessimism following Trump's aggressive tariffs. It surged to $3,167.84 an ounce but closed down 0.6% as concerns about economic impact grew.
• Commodity prices experienced their largest drop in over two years after Trump's tariffs raised concerns about global demand. The Bloomberg Commodity Spot Index fell 2.5%, its biggest decline since December 2022.

Fixed income:

• Treasuries closed higher except for long-end tenors. Yields dropped sharply in the Asian session after the US tariffs announcement. 2- to 5-year yields fell over 15 basis points due to a weak ISM report. The yield curve steepened, with the 5s30s spread widening by 12 basis points.

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