Global Market Quick Take: Asia – February 25, 2025

Key points:

• Macro: Euro Area CPI rises to 2.5%, highest since July 2024 
• Equities: US Indices end in the red with Palantir down 10.5%
• FX: CAD and MXN weakened as US tariff deadline approaches March 4th
• Commodities: Gold hit a record $2,956.19 as ETFs attracted investors 
• Fixed income: Treasuries climbed, bolstered by a strong 2-year auction 

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Disclaimer: Past performance does not indicate future performance.  

 Macro: 

• Euro Area's CPI was 2.5%, the highest since July 2024, due to rising energy costs. Non-energy goods inflation was steady at 0.5%, while services and food saw slower increases. Core inflation stayed at 2.7% for the fifth month. Consumer prices dropped by 0.3% in January after a 0.4% rise in December.
• The Chicago Fed National Activity Index dropped to -0.03 from 0.18 in December, signaling slower economic growth. Personal consumption and housing fell to -0.14, production indicators to +0.03, while sales and inventories were neutral, and employment rose to +0.07. 
• The Dallas Fed's Texas manufacturing activity index fell 22 points to -8.3 from a three-year high of 14.1 in January. The company outlook index decreased 24 points to -5.2, while the outlook uncertainty index rose to a seven-month high of 29.2. The production index dropped 21 points to -9.1. 

Equities:  

• US - US stocks struggled to rebound on Monday after last week's significant losses. The S&P 500 dropped 0.5%, and the Nasdaq decreased by 1.2%, while the Dow gained 33 points. The Nasdaq's decline was driven by tech sector weakness, with Palantir plummeting 10.5% and Microsoft falling 1% due to worries about reduced data centre spending. In contrast, Apple rose 0.7% after announcing plans to invest $500 billion in the US over the next four years and to hire 20,000 new employees. 
• Germany - DAX rose by 0.6%, ending a three-session losing streak and outperforming other European indices, as focus shifted to Germany's election results. Friedrich Merz's conservatives won but fell short of a 30% vote share, likely leading to a coalition with Olaf Scholz's weakened SPD.
• HK - HSI fell 0.6%, with the tech index down 1.1%. Investors reacted to President Trump's memorandum limiting Chinese investment in US strategic sectors and proposed fees on Chinese-made ships. Beijing urged the US to avoid politicising trade issues.

Earnings this week:

• Tuesday: Home Depot, Planet Fitness, Keurig Dr Pepper, DigitalOcean, Lucid
• 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 made slight gains after initially experiencing losses, as the deadline for US tariffs on Mexico and Canada approaches on March 4th. Despite a sparse economic calendar and anticipation of PCE data later in the week, there was little strong market conviction. The CAD weakened to 1.4260 against the USD, while the MXN weakened to 20.46 against the USD. 
• EUR outperformed the USD post-German election, likely resulting in a Grand Coalition. Despite initial gains, EURUSD faced resistance at 1.050 due to potential US tariffs and the ECB's dovish stance, with expectations to fall below 1.04.
• GBP gradually erased its initial gains, slipping lower after nearly reaching the 1.27 level, with BoE's Dhingra indicating that a "gradual" approach would still result in monetary policy being a drag on the economy this year.
• JPY slightly weakened, with USDJPY moving higher after recently finding support at the 149.00 level.
• Major economic data: China 1-Year Medium-Term Lending Facility, Germanay 4Q GDP Final, US February consumer confidence  

Commodities: 

• Gold hit a record $2,956.19 an ounce as ETFs gained investor interest. Prices rose for eight weeks, the longest streak since 2020, with gold-backed ETFs seeing the largest net inflows since 2022. 
• Oil prices rose slightly amid geopolitical uncertainties, including Russia-Ukraine talks and potential Iraqi production increases. West Texas Intermediate hit $70.70 after fluctuating. Iraq might add 185,000 barrels a day if a pipeline to Turkey reopens, while staying within OPEC limits.
• Copper futures fell below $4.53 per pound due to ample supply. Despite tariff threats, Trump only targeted steel and aluminium. China's overcapacity kept smelter charges low, with copper stocks tripling to over 260,000 tonnes. A global surplus defied shortage concerns. 

Fixed income:

• Treasuries rose as futures exceeded Friday's highs, aided by a strong 2-year auction. Later, German bunds fell on reports of €200 billion in German defence spending, underperforming Treasuries. Treasury yields were richer by 3 to 4.5 basis points, with the 5-year sector leading. The US 10-year yield closed near 4.39%, while 2-year yields hit their lowest since 7 February. 

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