Global Market Quick Take: Asia – February 11, 2025

Key points:

• Macro: Trump plans to impose reciprocal tariffs over next 2 days
• Equities: SMCI rallied 17.6% as business update looms.
• FX: JPY weakened despite PM Ishiba's optimism on avoiding higher US tariffs
• Commodities: Gold trades to high of $2,921
• Fixed income: Yield curve steepens from its year-to-date lows

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Disclaimer: Past performance does not indicate future performance.

Macro:

• US consumer inflation expectations held at 3%. Price expectations rose for gas, food, medical care, college, and rent. Home price growth increased to 3.2% in the West. Three-year inflation expectations stayed at 3%, five-year rose to 3%. Unemployment expectations fell to 34%, and income growth increased to 3%, while spending growth dropped to 4.4%.
• President Trump will announce plans for reciprocal tariffs on other countries within two days. He signed proclamations ending exclusions on steel and aluminum tariffs, raising duties to 25%, and is considering tariffs on cars, semiconductor chips, and pharmaceuticals.

Equities: 

• US - U.S. stocks rallied on Monday, with investors focusing on tech gains despite Trump's tariff threats. S&P 500 rose 0.7%, Nasdaq 100 gained 1.2%, and the Dow Jones Index climbed 166 points, boosted by McDonald's 4% jump. Nvidia and Broadcom surged 3% and 4.5%, recovering from January sell-offs. Steel and aluminium stocks also soared after Trump's tariff plans, with Cleveland-Cliffs up 18.1% and Nucor 5.7%. SMCI also rallied 17.6% on a looming business update today that might provide some clarity on the firm’s accounting issues.
• UK - FTSE 100 climbed over 0.5% to a record high of 8749 on Monday, driven by a 7.3% increase in BP shares following reports that activist investor Elliott Management acquired a stake to address BP's underperformance. BP shares reached their highest level since July.
• GE - DAX rose approximately 0.7% to a record high of 21,933 on Monday, reflecting gains seen across other European markets. Siemens Healthineers, MTU Aero Engines, and Zalando gained 1.5% to 1.8%, while Qiagen fell 3.5% after William Blair analysts cut their Q1 2025 EPS estimates post-Q4 results.
• HK - HSI climbed 1.8% to 21,522, its highest since early October, driven by broad sector gains and eased deflation concerns in China. The tech index rose over 2.5% amid optimism about China's AI tech. Major telecom operators announced a partnership with DeepSeek. Top performers included Meitu (3.9%), Meituan (5.4%), Xiaomi Corp. (3.1%), and Semiconductor Manufacturing (2.5%).
• Earnings this week: Coca-cola, Shopify, Gilead, Supermicro, Biogen, Robinhood, Cisco, Sony, Coinbase, Applied Materials, Palo Alto, Airbnb, Twilio, Moderna

FX:

• USD rose against most G10 currencies, except the AUD and NOK, due to expected trade developments. President Trump announced 25% tariffs on steel and aluminium imports, pending confirmation.
• GBP initially gained but later dropped to 1.236. Markets await BoE's Mann's comments on her February meeting dissent, where she favoured a 50bps rate hike over the 25bps enacted. Mann will discuss Britain's economic outlook on Tuesday, with a text from Governor Bailey anticipated. EUR had limited direct news, with EURUSD slightly decreasing to 1.0281.
• Japanese PM Ishiba's optimistic comments on avoiding higher US tariffs failed to support the JPY, with USDJPY rising to 152.53 and settling around 152.00.
• Australian PM Albanese's comments supporting an exemption from US steel tariffs contributed to AUD strength. New Zealand, with a higher percentage of exports to the US than Australia (10.9% vs. 3.2% in 2022), faced more tariff escalation, causing NZDUSD to drop below its 21-day moving average of 0.5648.
• Major economic data: BoE speech, US Fed speech

Commodities:

• Gold hits record high above $2,921/oz as Trump imposes 25% tariffs on US steel & aluminum. Up 11% YTD, setting records amid trade & geopolitical tensions. China's central bank boosts gold reserves for third month, diversifying despite high prices.
• Copper futures exceeded $4.6 per pound on Monday, reaching four-month highs due to tightening supply from Chile and increased demand from China post-Lunar New Year and the US ahead of potential tariffs.
• WTI crude oil futures rose 1.3% to $72.3 per barrel on Monday amid supply concerns from new US sanctions targeting Iranian crude transport to China. However, gains were limited by fears over the economic impact of President Trump's tariffs on steel and aluminum, affecting US oil drillers.

Fixed income:

• Treasury markets closed mixed, with the yield curve steepening for the first time in days, mirroring European markets. Trading was subdued ahead of key events like Fed Chair Powell's testimony and January CPI data. Short-term yields fell by 2 to 3 basis points, while long-term yields rose by about 1 basis point, partially reversing recent trends. The 2s10s and 5s30s spreads widened from year-to-date lows, and the 30-year swap spread narrowed, as Treasuries outperformed swaps due to positive supply and regulatory signals.

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