Global Market Quick Take: Asia – March 14, 2025

Key points:

• Macro: Trump threatens 200% tariff on EU alcohol over US whiskey tariffs
• Equities: US stocks dropped; Adobe fell on weak outlook, Intel rose with new CEO announcement
• FX: USD strengthened amid risk aversion and escalating US tariff threats
• Commodities: Gold hits record high nearing $3,000
• Fixed income: Treasuries rise on safe-haven demand

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Disclaimer: Past performance does not indicate future performance.

Macro:

• President Trump threatened a 200% tariff on EU wine and alcoholic beverages in response to the EU's new 50% tariffs on US whiskey. Geopolitical tensions rose as Russia rejected the 30-day ceasefire accepted by Ukraine and supported by the US.
• US initial jobless claims fell by 2,000 to 220,000, below the expected 225,000, marking a three-week low. Recurring claims dropped by 27,000 to 1,870,000 in late February, under the anticipated 1,900,000. These figures indicate a tight labour market despite ongoing tightening.
• Eurozone industrial output rose by 0.8% in January 2025, surpassing the expected 0.6% and reversing December's 0.4% decline. Growth was driven by intermediate goods (up 1.6%) and capital goods (up 0.5%), while non-durable consumer goods (-3.1%), energy (-1.2%), and durable consumer goods (-0.2%) saw declines.
• US producer prices were flat, following a revised 0.6% rise and below the expected 0.3% gain, marking a seven-month low. Services prices fell 0.2%, led by a 1.4% drop in machinery and vehicle wholesaling margins. Declines were also seen in food and alcohol retailing, automobiles retailing, apparel, chemicals wholesaling, and real estate loans.

Equities: 

• US - US stocks fell sharply on Thursday amid ongoing sell-offs, with President Trump's tariff threats unsettling investors. The S&P 500 declined 1.4%, entering correction territory, and the Nasdaq 100 slid 1.9%, affected by drops in Apple and Tesla. The Dow Jones decreased by 536 points, below 41,000 for the first time in weeks. Concerns over an escalating trade war grew as Trump threatened a 200% tariff on European wines and spirits. Softer-than-expected producer price inflation data mirrored the previous day's cooler CPI report. Adobe shares plunged 13.8% due to a weak revenue outlook, while Intel surged 14.6% after revealing a new CEO.
• EU - European markets fell on Thursday, with the Stoxx 50 down 0.9%, as Trump's tariff threats affected global trade. Wine and spirits companies, such as Pernod Ricard and Rémy Cointreau, dropped over 3% after Trump proposed a 200% tariff on EU alcoholic products in retaliation for the EU's whiskey tariffs. The Stoxx 600 dipped 0.2%, and auto stocks declined 1.6% due to concerns over US tariffs and EU counter-measures. Novo Nordisk rose 5% after Kepler Cheuvreux upgraded its stock to 'buy,' citing strong expected sales of its Wegovy treatment.
• HK - HSI fell 0.6% to 23,463, continuing its decline amid broad market losses. Sentiment worsened as Trump's tariff escalations led to EU and Canadian retaliations, with China pledging countermeasures. Budweiser APAC plans job cuts in China. Losses were limited by weak U.S. CPI data, supporting Fed rate cuts. Tech and consumer sectors dropped sharply, with major declines from Tongcheng Travel and Cathay Pacific.

Earnings this week:

• Friday: Li Auto, Gogoro, WRD, Drilling Tools International, Hudson

FX:

• USD strengthened broadly against other currencies as market sentiment turned risk-averse, driven by the threat of US tariffs. DXY rose to 103.9. President Trump maintained the April 2nd tariffs and threatened 200% tariffs on alcohol from France and EU countries, retaliating against their 50% tariff on US whiskey.
• EUR dropped below 1.09 due to escalating trade tensions and mixed signals from Germany's CDU and Greens regarding a financial package.
• GBP softened slightly, with limited downside due to a lack of UK catalysts ahead of GDP estimates.
• JPY strengthened, with USDJPY falling below 148.00 amid softer US yields and a risk-off atmosphere.
• AUD rose above $0.632, its third consecutive gain, supported by a weak US dollar amid trade war concerns.
• Major economic data: UK GDP, UK Industrial Production, UK Manufacturing Production, US Michigan Consumer Sentiment Preliminary, ECB Cipollone Speech

Commodities:

• WTI prices fell 1.7% to below $67 a barrel due to concerns over Trump's trade war affecting economic growth. The International Energy Agency expects oil supply to exceed demand by 600,000 barrels daily this year.
• Gold hit a record $2,989.98 an ounce due to worries about US growth and weak inflation data, as investors sought safer assets. Meanwhile, yields on 10- and 30-year Treasuries reached their highest levels this month.

Fixed income:

• Treasuries finished higher despite soft demand for the monthly 30-year bond auction. Yields were near session lows, with the auction trailing by just over a basis point but richened after the $22 billion sale. Late trading saw yields drop by 3.5 to 5 basis points, with minimal change in curve spreads; the 10-year yield was around 4.27%.

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