Global Market Quick Take: Asia – April 7, 2025

Key points:  

• Macro: Trump doubles down on tariffs narrative despite market selloff 
• Equities: US futures fell sharply, Nikkei 225 dropped 8% on Monday
• FX: AUD dropped below $0.60; JPY strengthened to 145 amid global recession fears
• Commodities: Gold drops below $3,000 & Copper fell 7.7% in London, a five-year record drop
• Fixed income: Two-year Treasury yield reaches its lowest level since 2022 

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Disclaimer: Past performance does not indicate future performance.  

 Macro: 

• Federal Reserve Chairman Jerome Powell stated on Friday that he anticipates President Donald Trump's tariffs will increase inflation. However, the central bank will not adjust interest rates until it has a clearer understanding of the tariffs' effects. 
• US NEC Director Hassett expects job numbers to fluctuate with tariffs in place. Over 50 countries have approached the White House for trade talks. President Trump opted not to impose tariffs on Russia due to ongoing Ukraine war negotiations. 
• Trump doubles down on the tariff narrative by indicating that he is not prepared to claw back any tariffs despite the market selloff. China said they would take “resolute measures” to safeguard its interests, including immediately restricting exports of seven types of rare earths. The EU has also retaliated to the Trump tariffs, placing tariffs on $28b worth of US goods. Both Taiwan and Vietnam have also offered to reduce their US tariffs to 0%, with Vietnam asking for a delay on the implementation of the tariffs against them. 
• The US added 228K jobs, exceeding February's 117K and forecasts of 135K. Health care, social assistance, transportation, warehousing, and retail trade saw notable gains. Federal government jobs decreased by 4K. 
• Canada experienced a decrease of 33,000 jobs, the first drop since January 2022, contrary to predictions of a 12,000 increase. This decline was due to a loss of 62,000 full-time positions (-0.4%), negating earlier growth. The employment rate fell to 60.9%. 

Equities:  

• US - US stock futures plummeted on Monday, marking a third session of declines as the White House pushed for aggressive tariffs, despite market turmoil. Dow and S&P 500 futures dropped 4%, while Nasdaq 100 futures fell 5%. The selloff began Thursday when President Trump announced high reciprocal tariffs, resulting in weekly losses of 7.9% for the Dow, 9.1% for the S&P 500, and 10% for the Nasdaq Composite. China retaliated with a 34% tariff on US imports, heightening market fears, and Canada and the EU were reportedly considering similar actions. Despite the selloff, the Trump administration insisted over the weekend that tariffs would proceed as planned.
• Japan – Nikkei is down 8.7% at the open, while the Topix slid 9.5% on tariff escalation over the weekend. Both Nikkei and Topix futures went into a circuit breaker this morning after gapping beyond the first price limit of 8%. Mitsubishi Financial Group is down over 20% and Nomura lost 17%.

Earnings this week:

Tuesday: Cal-Maine (CALM), Walgreens (WBA) 
Wednesday: Delta (DAL), Constellation Brands (STZ
Thursday: CarMax (KMX
Friday: JPMorgan Chase (JPM), Morgan Stanley (MS), Wells Fargo (WFC), Bank of New York Mellon (BK), BlackRock (BLK)

 
FX:

• DXY rebounded to above 102 from Thursday's drop after Trump's tariff announcement. China's 34% tariff on all US goods initially caused the decline. Support came from a strong NFP report despite rising unemployment. Fed Chair Powell's hawkish stance reduced short-term Treasury gains, indicating no rush for a rate cut.
• AUD fell over 4% to below $0.60, reversing gains due to market risk aversion and fears of a tariff-induced global recession.
• GBP dropped below $1.29 due to concerns over Trump's tariffs, with fears that higher duties on China and the Eurozone may undermine UK export competitiveness.
• JPY appreciated to 145 against USD, its strongest level since early October, due to a global shift towards safer assets and a declining USD.
• CAD declined towards $1.42 against USD, due to domestic economic fragility and trade uncertainties, highlighted by March's job loss of 32,600 and unemployment rising to 6.7%.
• CNH rose to 7.26 against USD after China announced a 34% tariff on US goods, effective April 10, 2025. Following Trump's similar tariff, total levies on Chinese exports reach 54%, potentially crippling shipments to the US.
• Major economic data: Germany Balance of Trade, UK Halifax House Price Index, Eurozone Retail Sales, Canada BOC Business Outlook Survey, Fed Kugler Speech

Commodities: 

• Gold and copper tumbled as Trump's trade war harms global economic prospects. Bullion fell 2.2% to below $3,000 an ounce, and copper dropped 7.7% in London, the largest in five years. The Bloomberg Commodity Index fell 5.8% last week. Collapsing equity markets and China's retaliation heighten fears over global demand. Iron ore in Singapore fell 3.6% to $97 a ton, a three-month low. 
• Oil plunged as Saudi Arabia slashed its crude price amid trade war recession fears. Brent fell nearly 4% to $63.01 a barrel, a four-year low, while WTI was at $59.93. Saudi Aramco will cut Arab Light crude prices by $2.30 a barrel for May, following OPEC+'s output hike. 

Fixed income:  

• Treasuries gained modestly on Friday after Fed Chair Powell warned of inflation risks from US tariffs. 10-year Treasury yield falls 10bps amid continued haven demand. The spread between 2- and 10-year yields widened by 8.7 basis points to 42.3 basis points, the widest since May 2022.

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