(Bloomberg) — US equity futures took a tumble whilst Treasuries saw a modest rise. Worries about America’s economic health seem to have made investors somewhat wary.
In the past week, the S&P 500 experienced its worst performance since September, dropping 0.8%. Meanwhile, the Stoxx 600 in Europe briefly gained 0.5% only to lose it swiftly.
In the Asian markets, shares also fell significantly. Chinese stocks in Hong Kong dropped 1.9%. The index representing Chinese tech shares went down by 2.1%. Deflationary pressures appeared to linger, casting a shadow over investor sentiment. The Chinese authorities imposed tariffs on Canadian imports, escalating the trade tensions.
The dollar’s strength seemed to wane as its gauge hovered near the lowest point seen since November. Treasury yields fell across all maturities as investors turned to the safety of fixed-income assets. Incidentally, gold inched upward, whereas oil prices dipped near September lows as weak economic data from China painted a bleak demand outlook.
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In a statement, Federal Reserve Bank of San Francisco President Mary Daly pointed at growing business uncertainty as a potential drag on US demand, but felt no immediate need to adjust interest rates. Federal Reserve Chair Jerome Powell mirrored this view last Friday, cautioning about the uncertainty in economic forecasts. Despite the gloom, he affirmed the path towards a 2% inflation target, suggesting tariffs could result in temporary price increases.
US employment seems to have stabilized, with nonfarm payrolls adding 151,000 jobs in February despite a prior month’s revision. The unemployment rate, however, nudged up to 4.1%.
Concerns about growth loom large, especially with Trump’s policies and tariffs taking a toll. As Rupal Agarwal, Asia quantitative strategist at Sanford C. Bernstein mentioned on Bloomberg TV, pressure from tariffs could lead to possibilities of inflation creeping again. She hesitated to cry “recession,” but warns we might be edging towards stagflation.
Date-wise, during the week, several key economic indicators are due. For instance, industrial production figures from Germany are expected on Monday, while Japan updates its current account. Tuesday will see Australia measuring consumer confidence and Japan releases data on GDP and household spending. Wednesday should bring the notable Canada rate decision.
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Germany industrial production, Monday
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Japan current account, Monday
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Australia consumer confidence, Tuesday
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Japan GDP, household spending, money stock, Tuesday
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US job openings, Tuesday
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Canada rate decision, Wednesday
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Japan PPI, Wednesday
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US CPI, Wednesday
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Eurozone industrial production, Thursday
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US PPI, initial jobless claims, Thursday
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France CPI, Friday
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Germany CPI, Friday
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UK industrial production, Friday
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US University of Michigan consumer sentiment, Friday
Investors’ confidence seems shaken as bond traders suspect economic stalling is imminent. Short-dated Treasuries have become quite popular. This sudden shift is based on the belief that the Federal Reserve will soon slash interest rates to prevent deterioration.
Moreover, analysts from JPMorgan Chase & Co., led by Fabio Bassi, advised caution about risk assets. Recent weeks have seen an increase in policy uncertainty, and there is talk of a potential Russia/Ukraine ceasefire. Germany and the EU’s fiscal plans contribute to the tumult.
The so-called “Trump put” has been under discussion among Wall Street strategists. It contemplates whether the administration may reconsider its tariffs as stocks falter. Numbers can measure how much pain Trump might accept before changing course.
Lastly, here is a summary of recent developments in various asset classes:
### Stocks
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Stoxx Europe 600: Little changed as of 8:13 a.m. London time
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S&P 500 futures: Dropped 0.7%
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Nasdaq 100 futures: Fell 0.9%
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Dow Jones futures: Fell 0.6%
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MSCI Asia Pacific Index: Fell 0.7%
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MSCI Emerging Markets Index: Fell 1%
### Currencies
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Bloomberg Dollar Spot Index: Slightly up, 0.1%
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Euro: Fell 0.2% to $1.0813
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Japanese yen: Rose 0.4% to 147.44 per dollar
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Offshore yuan: Down 0.3% to 7.2673 per dollar
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British pound: Fell 0.3% to $1.2883
### Cryptocurrencies
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Bitcoin: Down 1.2% to $82,093.4
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Ether: Up 1.1% to $2,069.48
### Bonds
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US 10-year Treasuries: Yield down four basis points to 4.26%
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Germany 10-year: Yield down one basis point to 2.83%
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Britain 10-year: Yield down two basis points to 4.62%
This news roundup, with input from Toby Alder, Winnie Hsu, and Abhishek Vishnoi, highlights a tumultuous period for world markets. As always, the analysis was powered with the help of Bloomberg Automation.
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