Global Market Quick Take: Asia – April 9, 2025

Key points:  

• Macro: Trump’s 104% tariffs on China to start on Wednesday 
• Equities: S&P 500 fell 1.57% with incremental reciprocal tariffs taking effect today
• FX: The yen and Swiss franc outperformed, while the yuan hit a record low
• Commodities: Oil prices reached their lowest level in four years
• Fixed income: 30-year yield climbed above 4.8%, steepening yield curve 

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Disclaimer: Past performance does not indicate future performance.  

 Macro:  

• Trump's 104% tariffs on China start Wednesday, raising global economic concerns. Beijing vows to resist, while investors fear recession impacts. Chicago Fed President Austan Goolsbee stresses careful economic data assessment before policy decisions. 
•  An EU spokesperson stated that the situation remains unchanged, with the EU aiming to avoid tariffs and awaiting meaningful engagement from the US. The EU plans to present a response to new tariffs early next week and is prepared for discussions. 
•  Canada's Ivey PMI dropped to 51.3 in March 2025 from February's 55.3, missing the forecast of 53.2. It remained above the expansion threshold, recovering from January's low of 47.1, supported by inventory growth (53.0 vs 49.4).   

Equities:

• US - US stock futures fell on Wednesday as President Trump’s tariffs, including a 104% levy on Chinese imports, are set to take effect. The Dow dropped 0.84%, the S&P 500 1.57%, and the Nasdaq 2.15% on Tuesday. Initially, stocks rallied on hopes for tariff negotiation progress, but reversed after Trump confirmed the tariffs. The White House called the measures "non-negotiable" due to national security concerns, while China vowed to "fight to the end." Despite over 70 countries, including Japan and South Korea, showing willingness to negotiate, investor sentiment remains low. Investors are now looking to the Fed's latest minutes for interest rate direction.
• EU - European stocks rebounded on Tuesday after a significant four-day decline due to US tariff concerns. The Stoxx 50 increased by 2% and the STOXX 600 by over 2.7%, marking their best day since 2022. Despite the rebound, trade tensions remained high, with EU officials ready to respond with countermeasures like digital taxes and 25% tariffs on select US goods. A proposed "zero-for-zero" industrial tariff deal was rejected by Trump, maintaining high tensions. In corporate news, Infineon shares rose after announcing a $2.5 billion acquisition of Marvell’s automotive unit.
• HK - The Hang Seng rose 299 points or 1.5% to 20,128 on Tuesday, slightly recovering from Monday's historic 13.2% drop, the largest since 1997. In response to market turmoil, China directed state-owned firms and listed companies to stabilise sentiment, and its financial regulator plans to increase the equity asset cap for some insurers by 5% to channel more long-term capital into stocks. However, early gains were trimmed due to ongoing fears about the trade war's impact on global growth, with Beijing vowing to "fight to the end" to protect its interests. China’s March CPI and PPI figures will be out tomorrow. Top movers included Horizon Robotics (12.8%), Mixue Group (7.0%), Xiaomi (7.0%), and Trip.com (5.8%).

Earnings this week: 

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: 

• USD initially weakened as risk sentiment improved at the start of the session, leading to bids in equities and all G10 currencies. However, sentiment later worsened due to significant concerns over China tariffs, with the White House confirming that 104% tariffs on China will be implemented at 00:01 EDT on April 9th. DXY declined to 102.72.
• EUR gained from the dollar's weakness but fell short of its peak levels after struggling to reach the 1.10 level, despite numerous ECB speakers who had little impact.
• GBP rose but lost most of its intraday gains against the dollar after failing to maintain a brief recovery to the 1.28 level as risk sentiment declined.
• JPY strengthened, with USDJPY briefly testing the 146 level on the downside due to dollar weakness and the yen's appeal as a safe haven currency.
• AUD was the weakest G10 currency against dollar, falling to 0.5950 as risk sentiment worsened.
• NZD saw slight gains, hovering above 0.5530. The RBNZ is expected to cut rates by 25 basis points to 3.5%.
• USDCNH surged past 7.42, reaching a record high following the White House's announcement that the 104% China tariff will be enforced.
• Major economic data: JP Consumer Confidence, BoJ Ueda Speech, US MBA 30-year Mortgage Rate

Commodities: 

• Oil prices hit a four-year low amid trade war fears affecting energy demand. Brent approached $61 a barrel, and WTI fell for the fifth day. Tensions with China, the largest crude importer, have sparked recession concerns. 
• Gold ended flat after the US confirmed it is moving forward with tariffs on China. Meanwhile, Premier Li Qiang said China has enough policy tools to "fully offset" negative external impacts. 
• Copper declined for the fourth session as the global trade war unsettles investors. The metal has fallen 11% since Trump's tariffs sparked market fears of a recession. 

Fixed income:  

• Treasuries' long end sold off, with 30-year yields rising by 20 basis points. The 2s10s spread widened, marking the largest one-day steepening since 2013, following a weak 3-year auction and ahead of more supply. Bear steepening drove swap spreads to new multi-year lows.

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