Global Market Quick Take: Asia – April 3, 2025

Key points:  

• Macro: Trump announces sweeping reciprocal tariffs from 10% to 49% 
• Equities: US stock futures dropped sharply after Trump's tariff announcement 
• FX: USD index fell to 103; USDJPY fell below 148 amid haven flows after US tariff  
• Commodities: Gold rose to a record level, surpassing $3,160 
• Fixed income: US Treasuries surged as a safe-haven bid 

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Disclaimer: Past performance does not indicate future performance.  

 Macro:  

• Trump announced sweeping reciprocal tariffs from 10% to 49%, sparking fears of a global trade war that could impact the US economy. Trump announced reciprocal tariffs at half the rates other countries charge the US: 20% for the EU, 34% for China, 24% for Japan, 10% for the UK and Australia, 26% for India, and 30% for South Africa.
• Canada and Mexico are not affected by the reciprocal tariffs but will still face the tariffs that were previously announced. Key items such as steel, aluminium, copper, pharmaceuticals, semiconductors, and lumber are excluded from reciprocal tariffs, yet they remain subject to the rates already announced or pending announcement. 
• In March 2025, US private businesses added 155K jobs, exceeding expectations. The services sector gained 132K jobs, while trade/transportation/utilities lost 6K. The goods-producing sector added 24K jobs, but natural resources/mining lost 3K. Pay gains slowed to 4.6% for job-stayers and 6.5% for job-changers. 

Equities:  

• US - US stock futures fell sharply on Thursday following President Trump's announcement of substantial reciprocal tariffs ranging from 10% to 49%, sparking fears of a global trade war impacting the US economy. Dow and S&P 500 futures dropped over 2% and 3%, respectively, while Nasdaq 100 futures fell more than 4%. Companies heavily reliant on imports were severely affected, with Apple down 7.5%, Nike 7%, Five Below 14%, Dollar Tree 11%, and Gap 8.5%. Major tech stocks also suffered, with Tesla down 7.2%, Nvidia 5.2%, and Amazon 5.8%. Trump further escalated tensions by imposing a 34% tariff on Chinese goods, raising total tariffs on China to 54%. The EU now faces a 20% duty, while Vietnam and Cambodia face steep tariffs of 46% and 49%, respectively.
• JP - On Thursday, the Nikkei 225 fell 4% below 35,000 and the Topix Index dropped 3.3% to 2,560, driven by President Trump's sweeping tariffs. Fears of a global trade war intensified, with a 24% tariff on Japanese goods and 25% on car imports, severely impacting Japan's auto industry. All sectors declined, with significant losses from major companies: Toyota fell 5%, SoftBank Group 6%, Tokyo Electron 6%, Fast Retailing 4.3%, and Mitsubishi UFJ 5.6%. Nissan shares dropped 5% after confirming the suspension of part of its production line in Mexico.

Earnings this week: 

Thursday: Conagra, Guess, Lamb Weston, MSC, Lifecore Biomedical. 
Friday: Acuity Brands, Lindsay Corporation, RenovoRx, Simulations Plus, FranklinCovey. 
  
FX: 

• USD weakened against G10 currencies as President Trump announced reciprocal tariffs. Dollar Index lower to 103, hitting a 24-week low. Risk markets initially rallied on a 10% baseline tariff, then reversed on higher levies.
• EUR surged to the day's peak during Trump's speech, later reducing gains, rising to above 1.0890.
• JPY strengthened to 148.20 against USD amid the haven flows following the Trump tariff announcements. 
• CAD fluctuated around the 1.43 level.
• MXN strengthened past 20.2 against USD, recovering from a near one-month low, due to its exclusion from U.S. aggressive tariff measures.
• Major economic data: Canada Balance of Trade, US Balance of Trade, US Initial Jobless Claims, US ISM Services PMI 

Commodities: 

• Oil prices declined after Trump imposed tariffs on major trading partners, excluding energy, escalating a trade war. Brent crude fell 3.2% to $72.52, while WTI remained above $69.
• Gold hit a record high above $3,160 an ounce as Trump announced tariffs, raising fears of a global slowdown. Bullion, exempt from tariffs, rose 1.1% after Trump's speech, following a 0.7% gain on Wednesday. 
• Copper prices fell as Trump's tariffs hit US trading partners, with London Metal Exchange copper down 1.6% and Comex copper dropping 4.2%. 

Fixed income:  

• US Treasury rallied with yields nearing 4% amid concerns over Trump's trade war. Ten-year yields dropped over 50 basis points this year as investors sought safe havens. Traders expect three rate cuts in 2025, starting in July, due to fears of economic slowdown. Japan's 10-year yield fell sharply after Trump's tariff announcement, down 12.5 basis points to 1.34%. Australia's 10-year bond yield saw its largest drop since July.

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