Morning wrap (26.03.2025)

The Asia-Pacific market extends investor uncertainty from yesterday's U.S. session. On the main indices, we observe slight declines or sluggish gains. Indices from China are losing between 0.15-0.30%. The Japanese JP225 index is down 0.15%, the Singaporean SG20cash is up 0.43%, and the Australian AU200.cash is up 0.15%.

U.S. futures are slightly down after a weaker close on Wall Street yesterday. Investors remain cautious, awaiting the announcement of tariffs by the U.S. next week.

The weakest currency today is the Japanese yen, which is losing between 0.4-0.6% against other G10 currencies after a dovish speech by Bank of Japan Governor Ueda.

In today’s statements, Ueda took a generally dovish stance, noting that the recent “very high” inflation in Japan was mainly caused by temporary factors such as rising import costs and food prices, which are likely to subside and therefore are not a reason to tighten monetary policy.

Ueda emphasized that interest rate hikes could occur if forecasts of rising food costs lead to further price pressure.

Australia's CPI indicator for February came in at 2.4% y/y, below expectations (2.5% y/y) and lower than the previous month, and comfortably within the Reserve Bank of Australia's inflation target range of 2-3%.

Despite the lower CPI reading, a rate cut by the RBA at next week's meeting is unlikely, given their earlier hawkish stance and the fact that this is not a quarterly inflation report, which the RBA pays more attention to.

Chicago Fed President Goolsbee said that the U.S. economy is entering a new phase, warning that rising long-term inflation expectations could become a serious issue.

He reiterated that interest rates should be lower in the next 12–18 months but noted that uncertainty could delay rate cuts, making a "wait and see" approach appropriate for now.

In China, advisors at the Boao Forum urged the government to increase support for domestic demand, especially service consumption, highlighting confidence and income as key driving factors.

Morgan Stanley raised its recommendations for Chinese stocks, including the MSCI China and Hang Seng indices, pointing to improved corporate discipline and increasing shareholder returns.

U.S. President Trump sent mixed signals in an interview regarding the tariffs announced for April 2. On one hand, Trump suggested limited exemptions for countries and products, and on the other hand, potentially milder rates than reciprocal tariffs.

Goldman Sachs warned that markets may be too calm about the tariffs and could be surprised if the measures turn out to be harsher than expected.