Global Market Quick Take: Asia – March 12, 2025

Key points:

• Macro: Canada suspends 25% electricity tariff after US doubles steel and aluminium tariffs
• Equities: US equities fell after initial tariff escalation between Canada and US
• FX: EURUSD rose above 1.09 level to its highest level since 11 October
• Commodities: Oil prices increased as the US reduced its oversupply forecast
• Fixed income: Treasuries fell on stronger-than-expected January job data

------------------------------------------------------------------

Disclaimer: Past performance does not indicate future performance.

Macro: 

• Canada agreed to suspend its 25% duty on electricity exports to the U.S. after scheduling talks to renew the North American trade agreement before Trump's 2 April tariff deadline. In response to Ontario's duty, President Trump announced plans to double tariffs on Canadian steel and aluminum imports to 50%.
• Job openings in the US rose by 232,000 to 7.74 million in January 2025, exceeding the expected 7.63 million. Retail trade, finance and insurance, and health care and social assistance saw notable increases, while professional and business services experienced a decline.
• UK retail sales grew by 0.9% in February 2025, slowing from January's 2.5% and below the 2.4% forecast. Non-food sales stagnated, while food sales increased by 2.3%, down from last year's 5.6%. Valentine's Day spending provided a brief lift amid cautious consumer behavior.

Equities:

• US - US stocks declined on Tuesday due to trade policy uncertainty. The S&P 500 fell 0.7% and the Dow dropped over 450 points; Nasdaq 100 decreased by 0.2%. Trump reconsidered doubling tariffs on Canadian steel and aluminium, following the announcement of a meeting between Ontario Premier Doug Ford and US Commerce Secretary Howard Lutnick on Thursday. Delta Airlines dropped 7% after lowering earnings expectations, with Disney and Airbnb losing 5% each. Investors anticipate Wednesday’s CPI report for market guidance.
• EU - European stocks fell to a one-month low as global equities reacted to escalating US trade tensions. The STOXX 50 dropped 1.7% and the STOXX 600 fell 1.8%. Trump's 50% tariff hike on Canadian metals intensified market fears, impacting firms like Stellantis (-5%), Mercedes Benz (-2.5%), and Volkswagen (-3%).
• HK – HSI closed nearly unchanged at 23,782, recovering from early losses as most sectors rose. Citigroup's upgrade of Chinese stocks to overweight, citing AI advancements, boosted sentiment. The tech index rose over 1%, led by Kuaishou Tech (5.2%) and Semicon Manufacturing (3.1%). Gains in property and financials were driven by optimism from China's parliamentary meeting, despite ongoing deflation and trade tensions.

Earnings this week:

• Wednesday: ZIM, Adobe, UiPath, SentinelOne, Crown Castle, Tilly’s
• Thursday: D-Wave, DocuSign, Dollar General, Ulta Beauty, Semtech, Futu
• Friday: Li Auto, Gogoro, WRD, Drilling Tools International, Hudson

FX:

• USD faced pressure due to the strengthening EUR, escalating trade tensions, and economic concerns. Key factors included President Trump's tariff threats, where he proposed a 50% tariff on Canadian steel and aluminium, citing Canada's 25% tariff on electricity. However, after Ontario's Premier announced the suspension of the electricity surcharge, Trump backed down on the steel and aluminium tariffs.
• EUR gained strength, surpassing the 1.09 level, buoyed by optimism from Germany's Green party regarding a potential defence deal. The collapse of Portugal's government after a no-confidence vote had little impact on the currency.
• GBP benefited from the weaker dollar, reclaiming the 1.29 level, despite minimal UK-specific catalysts.
• JPY experienced volatility but ultimately weakened against the dollar due to higher US yields. JPY weakened to above 148 against the USD.
• Major economic data: US Inflation Rate, Canada BoC Interest Rate Decision, ECB Nagel Speech, ECB Lane Speech

Commodities:

• Oil prices rose as the US cut its oversupply forecast, citing reduced output from Iran and Venezuela, while inventories increased by 4.2 million barrels despite a draw at Cushing, Oklahoma.
• Gold held the rally at around $2,915 an ounce, supported by haven demand amid Trump's fluctuating tariff plans and recession comments, despite market declines and a weaker US dollar.
• Copper prices increased due to a weaker dollar, constrained by tariff-related global growth fears. US manufacturers face higher metal costs, affecting confidence and inflation. A potential 25% tariff could raise copper prices and US imports.

Fixed income:

• Treasuries declined keeping yields near the day's highs; the successful $58 billion 3-year note auction trailed the WI by 0.6 basis points, supported by strong bidding ahead of Wednesday's $39 billion 10-year reopening, while early losses were driven by January job opening data exceeding expectations, resulting in US yields cheaper, intermediates leading the decline, and 10-year yields finishing near 4.275%, up by 6.5 basis points.

For a global look at markets – go to Inspiration.