Global Market Quick Take: Asia – March 7, 2025

Key points:  

• Macro: ECB cuts rates by 25bps and US employers announces 172k layoffs 
• Equities: S&P 500 down 1.8%, Nasdaq 2.6%; Marvell fell 19.8% on poor sales forecast 
• FX: JPY and CHF gained on risk-off sentiment; JPY below 147, CHF below 0.884 
• Commodities: Oil was heading for its largest weekly drop since October 
• Fixed income: Treasury curve pivoted around 10-year yield in a twist steepener 

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Disclaimer: Past performance does not indicate future performance.  

 Macro:  

• President Trump signed an amendment to the tariffs on Mexico and Canada, exempting USMCA-compliant products from levies until 2nd April. 
• ECB cut interest rates by 25 basis points, lowering the deposit rate to 2.50%, refinancing rate to 2.65%, and lending rate to 2.90%. This eases borrowing costs and reflects updated inflation assessments. Inflation is expected to average 2.3% in 2025 and 1.9% in 2026. Growth forecasts were reduced to 0.9% for 2025 and 1.2% for 2026 due to weak exports and investment. 
• US employers announced 172,017 job cuts in February 2025, the highest since July 2020 and the largest February total since 2009. Factors include government actions, cancelled contracts, trade war fears, and bankruptcies. The Government sector led with 62,242 cuts, followed by retail (38,956) and tech (14,554). Year-to-date cuts reached 221,812, the highest since 2009. 
• US initial jobless claims fell by 21,000 to 221,000 in late February, below the expected 235,000. Recurring claims rose by 42,000 to 1,897,000, close to the forecasted 1,880,000, showing a tight labor market. Federal employee claims increased by 1,020 to 1,634 amid DOGE firings. 

Equities:  

• US - US equities fell sharply on Thursday due to trade uncertainty and tariff policy changes from the Trump administration, causing investor anxiety. The S&P 500 dropped 1.8%, the Nasdaq fell 2.6% to its lowest since November, and the Dow Jones lost 428 points. Tech stocks led the decline, with Marvell Technology plummeting 19.8% after a poor AI-driven sales forecast, impacting Nvidia (-5.7%), Broadcom (-6.3%), and AMD (-2.8%). Despite a tariff delay, market sentiment remained weak. Bessent's tariff support and fears of slowing growth and stagflation persisted.
• HK – HSI rose 3.3%, to 24,370, its highest in over three years. Positive signals from China's parliamentary meeting boosted buying. Tech stocks rose 5.4%, led by Alibaba's 8.5% surge. Consumer, property, and financial stocks also gained, despite U.S. tariff hikes. Greentown China rose 7.7% on strong February sales, while Kuaishou Tech (15.8%), KE Holdings (10.4%), Kingsoft Corp. (10.9%), Tencent (6.7%), and Meituan (5.1%) also posted solid gains.
• EU - DAX hit a record high, rising over 1% to 23,380, boosted by suspended car import duties and optimism for more tariff exemptions. Auto stocks rose 2.7% to 5%. Deutsche Post surged nearly 12% with a cost-cutting plan, and Lufthansa gained 7% on a positive profit forecast. FTSE 100 fell over 0.5%; Melrose dropped over 10% despite strong profits, while Admiral rose nearly 7% after exceeding profit estimates.
• Afterhour price action - Broadcom (AVGO) jumped 12% with a positive AI spending forecast, while HP Enterprise (HPE) fell 20% after a disappointing profit outlook and plans to cut 3,000 jobs.

FX: 

• USD ended the day stable, despite early pressure from strong major currencies, tariff uncertainty, and mixed labour data. Initial Jobless Claims were lower than expected, but Challenger Layoffs rose. President Trump agreed to delay USMCA tariffs on Canada and Mexico until April 2nd.
•  Safe-haven currencies like the JPY and CHF led gains as risk-off sentiment prevailed in equity markets. JPY strengthened due to haven demand, as reports indicated that Japan's largest labour union, Rengo, is aiming for a 6.09% wage increase for 2025, up from the 5.85% sought in 2024. USDJPY closed around 147.75. CHF strengthened to about 0.884 against USD, its highest since 11th December.
• EUR hit a four-month high above $1.08 after the ECB's 25bps rate cut and possible pause in further cuts. The EUR is boosted by anticipated European spending. EU leaders discuss defence, with von der Leyen proposing an €800 billion plan, including €150 billion in loans.
• GBP weakened, with GBPUSD dropping below 1.29, amid limited macroeconomic drivers and a risk-off market sentiment.
• Major economic data: China Balance of Trade, Canada Unemployment Rate, US Non Farm Payrolls, US Unemployment Rate, Fed Chair Powell Speech, China Inflation Rate.

Commodities: 

• Oil prices rose slightly after a volatile session, as Trump delayed tariffs on Canadian and Mexican imports. WTI stayed above $66, ending a four-day decline, while Brent crude edged past $69 after hitting its lowest since late 2021. 
• Gold prices fell as investors evaluated the impact of tariff changes on the US economy. Trump reversed 25% tariffs on Mexican and Canadian goods, easing Republican concerns. Despite typical benefits from volatility, spot gold dropped 0.3% to $2,910.63 an ounce. 

Fixed income:  

• German 10-year yields dropped 4 basis points to 2.83%, increasing steepening pressure on Treasuries amid Fed easing expectations. The Treasury curve showed a twist steepener, with 2-year yields were richer by 4 basis points and 20- and 30-year yields cheaper by over 1 basis point. The steepening widened 2s10s and 5s30s spreads, influenced by US trade policy uncertainty and European rate selloffs.

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