Asian Stocks Rise on Cooling US Inflation; Trade War Woes Persist

Economic

Summary:

Most emerging Asian equities traded in positive territory on Thursday, following the release of cooler US inflation data for February, although an escalating global trade war continues to loom.

The MSCI's gauge for emerging Asian equities rose as much as 0.6%, rebounding from a 0.4% drop at close on Wednesday.

Data from the US showed that consumer prices increased less than expected in February, but investors fret that the improvement is likely temporary against the backdrop of aggressive tariffs on imports that are expected to raise the costs of most goods in the months ahead.

However, the upbeat sentiment from cooling US inflation supported a rebound in emerging Asia stocks and currencies, according to Poon Panichpibool, market strategist at Krung Thai Bank.

Stocks in Kuala Lumpur rose the most, advancing around 1.5% and snapping a five-session losing streak, while Thai equities climbed nearly 0.3%.

On the other side, as April approaches, concerns over reciprocal tariffs have surfaced, with US President Donald Trump continuing to impose tariffs on neighbouring countries. This could potentially have a negative impact on assets in emerging Asia, Poon warned.

"Countries such as India, Thailand, Philippines ... collect higher tariffs from the US when we compare to what the US collects from them ... we could definitely face reciprocal tariffs for sure, which could be quite negative for EM Asia," he said.

Stocks in Indonesia slipped, falling as much as 0.7% in early trade as a few large banks, including Bank Mandiri (Persero) and Bank Rakyat Indonesia (Persero), pulled the benchmark lower.

A nearly 30% drop in Indonesian government revenues in January, which comes as President Prabowo Subianto implements big spending plans, has raised concerns about fiscal sustainability and a potential jump in borrowing.

Meanwhile, equities in Taiwan fell the most, dropping around 1.4%, dragged by TSMC.

In currencies, the Indian rupee and the Philippine peso rose about 0.2% each.

On the other hand, the South Korean won and the Taiwan dollar slipped around 0.1% each.

A rise in global trade tensions and worries over US recession risks have rattled global markets and sparked huge volatility in the foreign exchange market, as traders see-saw between relief and angst over Trump's whipsawing policy changes.

Source: Theedgemarkets

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Warren Takunda

Stocks

London stocks nudged up in early trade on Thursday as investors continued to mull the impact of Trump’s trade war.

At 0855 GMT, the FTSE 100 was up 0.1% at 8,545.91.

Investors were mulling the latest twists and turns in Trump's trade saga, after the US President said he would impose more tariffs following retaliatory measures from the European Union and Canada.

Trump said on Wednesday that he would respond to the countermeasures. "Whatever they charge us with, we're charging them," he said.

Richard Hunter, head of markets at Interactive Investor, said: "In early trade, investor apathy was largely in evidence, while the technical Thursday headwind of stocks being marked ex-dividend resulted in those affected, such as NatWest, Endeavour Mining and Entain.

"Meanwhile, the UK economy will face its latest test tomorrow on the release of the GDP figures, with the overhang of the Budget measures potentially beginning to gain traction."

Looking ahead to the rest of the day, the US producer price index for February is due at 1230 GMT.

In equity markets, NatWest and Entain were the biggest losers on the FTSE 100 as they traded without entitlement to the dividend.

C&C Group tumbled as the Bulmers cider maker said full-year underlying operating profits would be "modestly below" target amid weaker consumer confidence and the impact of higher wages and employer taxes introduced in the Budget.

Trainline slumped as the online ticketing platform said fiscal year sales hit a record of almost £6bn and announced a new £75m share buyback, as full-year net ticket sales and revenues fell a little short of expectations.

Savills was weaker despite the real estate agency posting a large jump in annual earnings and saying that transaction volumes this year would be lifted by companies ordering staff to spend more time in the office.

Deliveroo fell even as it hailed its first ever year of profit and positive free cash flow despite an "uncertain" consumer environment, as it expanded its grocery and retail offering.

On the upside, Halma surged as it said it now expects an adjusted EBIT margin modestly above 21% for the full year to March 2025, compared to prior guidance of around 21%.

Bridgepoint and Volution also gained after results, while IG Group rallied as the online trading and investment firm posted a rise in third-quarter revenues as it benefited from stronger market conditions and an increase in active clients.

Source: Sharecast

Risk Warnings and Disclaimers

Add to Favorites

ING

Economic

The Monetary Policy Council did not change the interest rates, while the statement is in our driven by somewhat unrealistic inflation fears. The statement indicates that Thursday's press conference will also maintain a hawkish tone.

The Monetary Policy Council (MPC) kept all interest rates unchanged today. The debate was heated, as the decision was announced much later (1 hour and 45 minutes later than in February and 42 minutes later than in January). This signals growing differences of opinion within the MPC, which is also evident in public interviews with Council members. The reference rate remains at 5.75%.

We perceive the tone of the official statement after the MPC meeting as hawkish, even more so than in previous months. This is evidenced by:

The National Bank of Poland (NBP) still presents a bleak scenario for energy prices and an average CPI in 2025 at 4.9% year-on-year, in line with the mini-projection presented by the governor in February. Also, we have not seen an alternative projection with flat energy prices in the fourth quarter of 2025 (as signalled by the ministry), which also presents a hawkish bias.The statement with the view on future CPI includes a section on persistently high core inflation was additionally supplemented by the context of "further economic recovery, with a marked increase in domestic demand," also indicating heightened concerns of the Council about inflation rising this year.The CPI projection for 2026 is higher than the last November projection, which also assumed an increase in electricity prices in the fourth quarter.

The next to watch by investors will be Thursday's press conference by Governor Glapiński. Interestingly, the the previous months hawkish comments by the NBP governor are still not reflected in market valuations. The rates market is pricing in around 90 basis points of NBP rate cuts by the end of 2025, and these expectations have slightly increased compared to the February meeting.

We expect the NBP governor to strongly emphasise inflation risks, including regulated price increases and the (low probability) scenario of a spike in energy prices in the fourth quarter (the Minister of Climate signals that energy prices should not rise). Glapiński will also place significant emphasis on high wage dynamics and persistent service price inflation. At the same time, we believe he will pay little attention to factors driving low inflation, such as the strong złoty (especially against the dollar) or falling oil prices. He will likely balance this with arguments about ongoing economic recovery and fiscal expansion.

In our opinion, the current level of interest rates is increasingly impacting the economy through the credit channel and the strong złoty. Demand for credit remains weak, and businesses, analysing the cost of credit, compare it to the last decade of super-low interest rates. The strong PLN also has a cooling effect on exporters. The declared profitability exchange rate for exports is 4.00/€, but it has significantly shifted downwards along with the current rate. For the first time in many years, the current €/PLN rate is so close to the profitability exchange rate for exports. This, combined with still weak economic conditions in Germany, discourages exporters from investing, who have shown above-average investment expenditures in the past.

Persistently high core inflation suggests caution in reducing interest rates, but our models indicate that core inflation will start to decline in 2026.

Taking all factors into account, we see room for slight fine-tuning and reduction in the restrictiveness of monetary policy and rate cuts of 50-100 basis points. A change in the MPC's stance is possible only in mid-2025, after the CPI peak and when we know the results of the electricity tariff revision, which we believe will stabilise household electricity prices, rather than the spike currently assumed by the NBP.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Justin

Economic

A majority of Americans believe President Donald Trump is being too “erratic” in his moves to shake up the US economy, as his imposition of tariffs against some of the nation's top trading partners hammers stock markets, a new Reuters/Ipsos poll found.

Some 57% of respondents, including one in three Republicans, said the president’s policies have been unsteady as his efforts to tax imports have set off a global trade war, according to the two-day poll that closed on Wednesday.

Americans instead want Trump to continue to focus on combating high prices even as there are growing concerns his policies will drive costs up, not down, the poll found.

Trump’s imposition of tariffs on allies such as Canada and Mexico and his refusal to rule out a recession has spooked US markets. The S&P 500 has lost more than US$3 trillion (RM13.3 trillion) in value since its all-time peak last month.

In response, the White House has said that some short-term economic pain might be necessary for Trump to implement his trade agenda, which is intended to drive manufacturing back to the US.

Wall Street has been shaken by some of Trump's whipsaw policy reversals. On Tuesday, Trump announced more severe tariffs on Canadian metals — causing stocks to fall — and then dropped the threat later that day after Canada made a concession.

Overall, 44% of respondents said they approved of the job Trump was doing as president, unchanged from a Reuters/Ipsos poll conducted March 3-4. He got particularly weak marks on the issue of the cost of living, where just 32% of respondents approved of his performance.

And most of them — 70% including nine in 10 Democrats and six in 10 Republicans — said they expected higher tariffs will make groceries and other regular purchases more expensive.

For most of his political career, Trump — a real estate developer turned reality TV star — has pointed to the strength of the stock market as an indication of economic health. But since returning to office, he has downplayed it.

“Markets are going to go up and they’re going to go down. We have to rebuild our country,” Trump said at the White House on Monday.

That’s a sharp change in tune from his first term, when, in March 2017, Trump celebrated the Dow Jones industrial average blasting through the 21,000 mark for the first time.

"Since November 8th, Election Day, the Stock Market has posted $3.2 trillion in GAINS and consumer confidence is at a 15 year high. Jobs!" Trump at the time posted on the site now called X.

A White House spokeswoman on Wednesday urged patience, calling the market’s performance “a snapshot of a moment in time, and we expect there will be good days and there will be bad days, but ultimately, Wall Street and Main Street are going to benefit from this president's policies, as they did in his first term.”

Inflation was far and away the top concern of respondents to the poll. Six in ten respondents said that was the issue they thought Trump should prioritize, far more than those who cited other presidential priorities including reducing the size of government, addressing immigration and fighting crime.

Recession warnings

Some analysts have painted a gloomier picture. Investment bank JPMorgan sees the risk of a US recession this year at around 40%, and considers an economic downturn even more likely if Trump follows through with another planned wave of tariffs in April.

Already, the White House has steepened levies on Chinese-made goods and on Wednesday hiked taxes on a wide range of imported automotive and tractor parts, construction materials and machinery parts — much of which are purchased from Canada and Mexico. Canada and the European Union on Wednesday pledged to retaliate with their own trade barriers on US products.

Inflation, which surged under Trump's predecessor in office, Democrat Joe Biden, remains high and is expected to increase due to tariffs, analysts say.

Despite the volatility, Republicans on Capitol Hill and Trump’s supporters still support his economic vision.

Senator Roger Marshall told Reuters he believes the market was “overvalued.”

“The market is one piece of the puzzle,” Marshall, of Kansas, told Reuters. “There’s other things going on: How do we get interest rates down, bringing manufacturing jobs here. I think it’s all a pretty complicated picture.”

Others acknowledged that the declines were a worry for Americans, particularly retirees and those approaching retirement age sensitive to their retirement savings accounts.

"We all know that people who are relying on retirement accounts watch them daily. And so, I think maybe he needs to be a little more sensitive to that," said Republican Senator Shelley Moore Capito of West Virginia.

Democratic Senator Richard Blumenthal of Connecticut viewed the sell-off differently. “It may not make any difference to him, because he's a billionaire. But to the everyday investor, it's a really big deal to lose this amount of money,” he said.

Nearly 80% of Republicans in the two-day poll said they agreed with a statement that Trump's actions on the economy "will pay off in the long run," a sign that some people in Trump's party have faith in his policies even if they are nervous about the short-term effects.

Forty-one percent of respondents overall — and just 5% if Democrats — said Trump's policies would pay off eventually.

Americans for Responsible Growth, an advocacy group representing Democratic state treasurers, called Trump’s approach “chaotic” and said it was harming investors across the nation.

“What may have seemed like a quick fix in Trump’s mind has become a big mess that will not only take a long time to clean up, but has also left consumers and businesses with higher prices, fewer choices, and more uncertainty,” said Dave Wallack, the group’s executive director.

The poll surveyed 1,422 US adults nationwide and had a margin of error for all respondents of three percentage points.

Source: Theedgemarkets

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Alex

Economic

Forex

GBP/USD started a decent increase above the 1.2800 resistance zone.

A key bullish trend line is forming with support at 1.2720 on the 4-hour chart.

EUR/USD climbed above the 1.0880 resistance zone.

Bitcoin failed to recover above the $85,000 resistance zone.

GBP/USD Technical Analysis

The British Pound formed a base and started a fresh increase above 1.2800 against the US Dollar. GBP/USD broke the 1.2850 resistance to enter a positive zone.

Looking at the 4-hour chart, the pair settled above the 1.2850 level, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). The pair even cleared the 1.2920 resistance zone.

It seems to be aiming for a move above the 1.3000 resistance zone, which is a major hurdle for the bulls. The next major resistance is near the 1.3050 level.

The main resistance is now forming near the 1.3120 zone. A close above the 1.3120 level could set the tone for another increase. In the stated case, the pair could even clear the 1.3200 resistance.

On the downside, immediate support sits near the 1.2880 level. The next key support sits near the 1.2850 level. Any more losses could send the pair toward the 1.2800 level. The main support could be 1.2740. There is also a key bullish trend line forming with support at 1.2720 on the same chart.

Looking at EUR/USD, the pair also started a decent increase and the pair could now aim for a move toward the 1.1000 resistance.

Upcoming Economic Events:

US Initial Jobless Claims – Forecast 225K, versus 221K previous.

US Producer Price Index for Feb 2025 (YoY) – Forecast +3.3%, versus +3.5% previous.

Source: ACTIONFOREX

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

FastBull Featured

Daily News

[Quick Facts]

U.S. budget deficit hits $1.1 trillion, a record high for the same period.

Russia is not informed of U.S.-Ukraine negotiation results, it's "too early" to discuss a truce.

The U.S. government faces another shutdown as Democrats and Republicans struggle to reach an agreement.

Former Bank of England Governor Mark Carney to assume office as Canadian Prime Minister on Friday, Cabinet size potentially halved.

Bank of Canada reduces policy rate by 25 basis points as expected, adopts "Cautious" approach to tariff impacts.

U.S. CPI cools but underlying concerns remain.

[News Details]

U.S. budget deficit hits $1.1 trillion, a record high for the same period

The U.S. budget deficit continued to expand in February, pushing the deficit for the first five months of the fiscal year to 1.15 trillion, driven primarily by rising Medicare costs and government debt servicing expenses. Data released by the Treasury on Wednesday showed a February deficit of 307 billion alone. Adjusted for calendar differences, the budget deficit for the fiscal year starting October 1st is 17% higher than the same period last year. The widening deficit could complicate President Donald Trump's efforts to extend and expand the 2017 tax cuts, most of which expire at the end of this year.

Russia is not informed of U.S.-Ukraine negotiation results, it's "too early" to discuss a truce

On March 12, Russian Ambassador to France Alexey Meshkov stated in a media interview that Russia has not yet been informed of the results of U.S.-Ukraine negotiations, making it "too early" to discuss a truce. Russia needs more details and hopes to resolve the conflict through diplomatic means. Meshkov reiterated Russia's stance on resolving the Ukraine conflict, which includes Ukraine not joining NATO, no deployment of NATO troops on Ukrainian territory, and NATO refraining from any form of military exercises or training in Ukraine.

The U.S. government faces another shutdown as Democrats and Republicans struggle to reach an agreement

Senate Democrats gathered on Wednesday to discuss a temporary funding bill passed by the Republican-controlled House (which requires 60 votes to advance in the Senate, where Republicans hold 53 seats). With just two days left before a partial government shutdown, Senate Democratic Leader Chuck Schumer called for a one-month extension of current spending to allow time to complete a more comprehensive funding bill for the year, but this strategy is unlikely to succeed.

Schumer warned that all 47 Democratic senators oppose the House-passed six-month funding bill, with only one House Democrat voting in favor. In a brief speech to the Senate, Schumer said, "I am hopeful Democrats will join Republicans to prevent a possible shutdown on Friday." Republican Senator Markwayne Mullin stated that if a shutdown occurs, it would be "100% Schumer's fault."

Former Bank of England Governor Mark Carney to assume office as Canadian Prime Minister on Friday, Cabinet size potentially halved

According to sources, former Bank of England Governor Mark Carney will be sworn in as Canada’s 24th Prime Minister on Friday, with the new cabinet potentially halved in size compared to Trudeau’s administration. One source indicated that the cabinet is expected to have between 15 and 20 ministers, down from 37 currently including the prime minister. The 59-year-old Carney takes office as U.S. President Donald Trump’s tariff policies create global economic turbulence and disrupt U.S. trade partners. Carney stated on Wednesday that he is prepared to engage in dialogue with Trump if Canada’s sovereignty is respected. It remains unclear whether the Finance Minister, Foreign Minister, and Industry Minister will retain their positions, as all three have been actively involved in trade responses to the U.S.

Bank of Canada reduces policy rate by 25 basis points as expected, adopts "Cautious" approach to tariff impacts

The Bank of Canada announced on Wednesday a 25-basis-point rate cut to 2.75%, the lowest level since September 2022. The monetary policy statement indicated that the Canadian economy is on a solid footing in 2025, with inflation close to the 2% target and strong GDP growth. However, escalating trade tensions and U.S. tariffs could slow economic activity and increase inflationary pressures.

The economic outlook faces more uncertainty than usual due to rapidly changing policy environments. The pervasive uncertainty created by continuously changing US tariff threats is restraining consumers’ spending intentions and businesses' plans to hire and invest. Against this background, and with inflation close to the 2% target, the Governing Council decided to reduce the policy rate by a further 25 basis points.

While trade wars bring cost pressures and potential inflationary shocks, policy interventions cannot fully offset their impacts but can ensure price increases do not lead to long-term inflation. The Bank will closely monitor how cost pressures translate into consumer prices. Recent surveys show consumers widely expect tariffs to push prices higher, raising inflation expectations.

At a later press conference, Bank of Canada Governor Tiff Macklem stated, "We are facing a new crisis. Depending on the extent and duration of new U.S. tariffs, the economic impact could be severe." The uncertainty surrounding the current tariff dispute is "ubiquitous" and has already negatively impacted economic activity.

The Bank will cautiously adjust policy rates, fully assessing the upside inflation pressures from rising costs and the downside pressures from weak demand.

U.S. CPI cools but underlying concerns remain

The U.S. February CPI rose 2.8% year-on-year (previous reading was 3% vs expected 2.9%) and 0.2% month-on-month (previous reading was 0.5% vs expected 0.3%). Core CPI increased 3.1% year-on-year (previous reading was 3.3% vs expected: 3.2%) and 0.2% month-on-month (previous reading was 0.4% vs expected: 0.3%).

The data, which fell below expectations and previous readings, reflects a continued cooling trend in U.S. inflation. Against the backdrop of a sharp sell-off in U.S. stocks, Wall Street paid close attention to this CPI report. Following the release, traders increased bets on Fed rate cuts, expecting at least two cuts this year, with the first likely in June.

However, the February CPI did not reflect the inflationary impact of U.S. tariffs, leaving market concerns about the U.S. inflation outlook unresolved. Before details of reciprocal tariffs are revealed, the data gives a sense of "calm before the storm." The longer inflation remains above the Fed's target, even if due to temporary factors like tariffs, the greater the likelihood of upward revisions to expectations.

As inflationary risks from Trump's tariff plans gradually emerge, recent economic data has shown volatility, and consumer concerns have risen. For the Fed, the challenge of balancing economic growth and price stability through monetary policy will become increasingly severe.

[Today's Focus]

UTC+8 10:30 Reserve Bank of Australia assistant Governor Jones Speaks

UTC+8 17:00 IEA releases monthly Oil Market Report

UTC+8 17:15 ECB Vice President Guindos speaks

UTC+8 20:30 U.S. February PPI

Risk Warnings and Disclaimers

Add to Favorites

Owen Li

Economic

Germany's fiscal plans will have their first reading in parliament. Despite recent stumbling blocks, yield levels and curves have retraced only very little, and Bunds have even softened again versus swaps. The fiscal story also remains tense in the US, as latest fiscal numbers show an ever-widening deficit. DOGE has quite a task at hand.

Germany's fiscal reset goes to parliament

EUR rates levels and curves managed to retrace somewhat on Wednesday with fewer headlines out of Germany to drive the market, but attention turned towards tariffs. It still remains a decoupling theme in the sense that US rates have taken the opposite direction on Wednesday, allowing the 10y UST/Bund spread to climb above 140bp again.

Germany will remain the big driver in the background for EUR rates, though. Parliament will convene in a special session for the first reading regarding the defence and infrastructure plans. This is a first debate of the proposal by the SPD and CDU/CSU, but also of the initiatives by the Greens and FDP. No decisions will be taken in this session, and the proposals will be delegated to the budget committee for deliberation before a second reading and vote in parliament next week.

To recap, the proposals that are on this session's agenda are:

SPD and CDU/CSU: Exempt defence spending greater than 1% of GDP from the debt brake and allow the German federal states to incur deficits of 0.35%. Creation of a €500bn special fund for infrastructure investments of which €100bn would be reserved for the federal states.

Greens: Exempt defence spending greater than 1.5% of GDP from the debt brake with a broader definition of defence spending.

FDP: Increase the existing defence special fund to €300bn, with the condition that it can be tapped only for defence expenditures exceeding 2% of GDP.

The Greens are basically proposing to separate the package into the more pressing defence issue for immediate decision still within the old Bundestag, while leaving it to the next Bundestag to take up the infrastructure plans. Then also the votes of the Left would be needed. On Wednesday the informal conference of the 16 federal heads of state called for the package not to be separated. Eventually, the states will have to pass and decision in the Bundesrat.

German Bunds have been trading gradually softer again over the past sessions with 10y Bunds now yielding 15bp over swaps. That is still off from last week’s cheapest levels where the spread was as high as 18bp, but it had temporarily recovered back towards 12bp. In all, the market is eyeing a compromise to a still sizeable package or a least a lasting change in Germany’s fiscal attitudes.

US fiscal numbers continue to place pressure on Treasuries

The US fiscal deficit for February came in at $307bn. That’s up from $296bn for the same month last year. Not dramatically up, but still up. The running numbers don’t look great. Total spending in the current fiscal year is running at 13% above last year, while receipts are only up 2%. The overall fiscal deficit cumulates to $1.15tn for the first five months of the current fiscal year, compared with $0.83tn for the same period last year. No magic DOGE pill here as of yet!Funding requirements are only under upward pressure here.

Already over 22% of the debt is financed with bills, partly to keep it from pressuring coupon issuance by too much. These data keep the pressure on, even as Scott Bessent has promised no change in the coupon issuance profile in the coming quarters. So that must mean even more bills issuance. Even tougher as we continue to bang against the debt ceiling. The last thing needed now from a sentiment perspective is a government shutdown of some description, which is risk should the Senate decide not to pass the continuation bill in the coming days. Tough days continue. Not great for Treasuries overall.

Thursday's events and market view

German politics could dominate as the fiscal package gets a first reading in parliament. There is also busy slate of European Central Bank speakers across the dove-hawk spectrum including Holzmann, Villeroy and Nagel, but there is very little in terms of guidance policymakers will be willing to give in these highly uncertain times. The only data of note is industrial production for January.

Over in the US producer prices will provide more details to the inflation picture after the cooler-than-expected CPI reading. The jobless claims will provide a more contemporaneous read of labour market conditions, but consensus is looking for only little change.

In primary markets, Greece should be active after having mandated a dual tranche syndication, reopening 13y and 30y bond lines. Italy will auction a new 3y bond alongside taps of a 7y green bond as well as 8y and 30y regular bonds (up to €8.25bn in total). the US Treasury will auction 30y bonds (US$22bn).

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites