Global Market Quick Take: Asia – April 10, 2025

Key points:

• Macro: Trump increased China's tariffs to 125%; A 90-day pause and reduced tariffs to 10% for 75 countries.
• Equities: S&P 500 rallied near 8%, Nasdaq 100 added 10%, with tech leading gainers
• FX: Dollar rallied; USDJPY peaked at 148.27, safe havens sold; AUD rallied above 0.61
• Commodities: Spot gold rises for its biggest intraday jump since 2020
• Fixed income: Treasury market volatility surged with rising front-end yields

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Disclaimer: Past performance does not indicate future performance.

Macro:

• President Trump increased tariffs on China to 125%, with a 90-day pause and reduced tariffs to the baseline of 10% for 75 countries who sought talks. He cited fear for the pause and noted China's interest in a deal. Trump suggested possible deals with China and the EU, emphasized tariff flexibility, commended the bond market, and considered exemptions for some US companies.
• Fed minutes from March 2025 indicate policymakers expect tariffs to raise inflation, with uncertainty about the impact's extent and duration. Most officials see inflation pressures as potentially persistent, with inflation risks tilted upwards and employment risks downwards.

Equities: 

• US - US stocks surged on Wednesday, bouncing back from over one-year lows earlier in the session. This followed President Trump's 90-day pause on tariffs for non-retaliating countries. The S&P 500 rose nearly 9.5%, the Dow increased 7.8%, and the Nasdaq 100 led with a 12% rise, driven by positive sentiment towards tech stocks. Despite escalating the trade war by raising tariffs on China to 125%, tech stocks saw substantial gains, with Nvidia jumping 15%, Tesla increasing 16%, and Apple up 12%.
• EU - DAX futures rallied as much as 8% after the cash market closed as Trump announced a 90 day pause for countries who approached the US for talks, dropping their rates to the baseline of 10%. In Germany, the CDU/CSU and SPD reached a coalition agreement, ending a lengthy stalemate. The deal includes measures to control irregular migration, enhance border controls, and boost investment in the military and infrastructure. Merz expressed confidence that the coalition would be ratified and operational by early May.
• HK - The Hang Seng advanced 137 points, or 0.7%, to 20,264 on Wednesday, ending a two-day losing streak with gains in tech, consumers, and property leading the recovery. Premier Li Qiang's comments bolstered sentiment, asserting Beijing's capability to counteract external pressures like the new 104% U.S. import tariffs. Mainland stock rallies, aided by state-owned support and buyback plans from major brokerages, further lifted the mood. Notable gainers included SMIC (10.5%), Meituan (4.8%), Kuaishou Tech. (1.9%), Xiaomi (8.6%), Mixue Group (7.5%), and China Resources Beer (6.8%)

Earnings this week:

Thursday: CarMax (KMX)

Friday: JPMorgan Chase (JPM), Morgan Stanley (MS), Wells Fargo (WFC), Bank of New York Mellon (BK), BlackRock (BLK)

FX:

• USD rose as President Trump announced a 90-day tariff pause for 75 countries, reducing tariffs to 10% for non-retaliators. Tariffs on China will rise to 125% after its additional 50% tariff on the US. Trade discussions overshadowed the FOMC Minutes. DXY rose to 102.8.
• EUR returned to flat levels around 1.0970 after retreating from resistance near 1.11. The EU had initially planned countermeasures against the US, but Commerce Secretary Lutnick suggested the EU might delay its tariff retaliation following Trump's announcement.
• GBP strengthened amid volatile trading, with GBPUSD fluctuating above the 1.2830 level.
• JPY weakened as risk appetite increased due to Trump's 90-day tariff pause, pushing USDJPY briefly above 147.00.
• RBNZ reduced the OCR by 25 basis points to 3.5%, as anticipated, leading to an initial rise in the Kiwi, which was further boosted by Trump's tariff pause announcement. NZDUSD and AUDUSD have recovered the losses from the past two trading days, hovering around 0.5660 and 0.6170, respectively.
• Major economic data: China Inflation Rate, China PPI, ECB Speech, US Inflation Rate, US CPI, US Initial Jobless Claims, Fed Goolsbee Speech, US Monthly Budget Statement

Commodities:

• Oil prices surged for the first time since Trump started a trade war, as some countries received a temporary reprieve. Brent crude rose above $65 a barrel after dipping below $60, while WTI climbed above $61.
• Gold rose after achieving its largest one-day gain in 18 months, as uncertainty over Trump's tariff plans led investors to seek it as a safe haven. Gold climbed 3.9% before closing up 3.3%, just under $100 from last week's all-time high.

Fixed income:

• The Treasury market experienced volatility after President Trump's 90-day tariff pause announcement, boosting front-end yields. Swap spreads widened, particularly in the 30-year sector, while expectations for a Fed rate cut in May faded. Front-end yields were 18 basis points cheaper, with 2s10s and 5s30s spreads flattening by 11 and 15 basis points, respectively.

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