Morning wrap (05.03.2025)

Markets in the Asia-Pacific region are rebounding, supported by the absence of further extreme and unexpected announcements during Donald Trump's conference last night. The gains are also driven by U.S. Commerce Secretary Howard Lutnick's statement that the Trump administration may roll back some tariffs.

In response to Lutnick's statement, U.S. indices managed to recover before the close of the cash session.

Meanwhile, stocks in China and Hong Kong are additionally benefiting from economic growth targets announced at the annual gathering of China's parliament.

The CH50cash index is up 0.75%, CHN.cash is trading 2.00% higher, and the JP225 index is gaining 0.60%, reaching 37,400 points. The Singaporean SG20cash index is up 0.24%, while the Australian AU200cash is the only one declining, losing 0.65%.

Futures contracts on European indices indicate a higher opening for the cash session. The German DAX index is gaining 0.44%, holding around 22,800 points, while the UK100 is up 0.18%, and the European EU50 index is rising by 0.50%.

This week marks the start of the National People's Congress (NPC—China's annual parliamentary gathering), which will run until March 11. This year's session has introduced a range of economic and budgetary measures that are crucial for the country's economic policy in 2025. The key macroeconomic targets include:

• China's GDP growth target for 2025 remains at "around 5%."

• The urban unemployment rate target is set at approximately 5.5%.

• The CPI inflation target is around 2%, down from the current 3%.

• The budget deficit for 2025 is set at 4% of GDP.

• China will adopt a more proactive fiscal policy and continue implementing an appropriately loose monetary policy.

The Deputy Governor of the Reserve Bank of Australia (RBA), Hauser, made a public appearance today, highlighting risks and uncertainties related to the trade war. The Reserve Bank of Australia expects a very slow path of interest rate cuts. Risk factors include slowing global growth and the impact of tariffs on Australian CPI inflation.

Australia's GDP report was also released. The country's economy grew by 0.6% quarter-over-quarter in Q4 2024 and by 1.3% year-over-year. The pace of economic growth clearly picked up towards the end of 2024.

Donald Trump delivered the State of the Union address before a joint session of Congress.

• Trump announced a tax deduction for interest on car loans, specifying that it would apply only to vehicles manufactured in the U.S.

• Trump confirmed that reciprocal tariffs would take effect on April 2 and acknowledged that the new tariffs would cause economic disruptions, emphasizing the need for an adjustment period.

• Trump announced the repeal of the Chips Act, which supported domestic semiconductor production.

• He reaffirmed the introduction of 25% tariffs on aluminum, copper, and steel.

The Deputy Governor of the Bank of Japan (BOJ), Shinichi Uchida, confirmed the BOJ's hawkish stance on monetary policy during his speech. The Bank of Japan intends to continue raising interest rates if economic forecasts materialize.

China's services PMI rose to 51.4 in February, exceeding expectations of 50.8 and up from the previous 51.0. New business growth was moderate, while export orders reached a three-month high, boosting optimism in the services sector.