Morning wrap (02.04.2025)

Indexes in the Asia-Pacific region are seeing a mixed session, after U.S. stocks yesterday ended up trimming gains at the close of the cash session. Indexes in China are gaining between 0.00–0.10%. The Japanese JP225 index is up 0.10%, the Australian AU200.cash is down 0.30%, as is the Singaporean SG20cash.

CFD contracts on U.S. indexes are losing today between 0.10–0.20%. European stock indexes also point to a slightly lower opening of the cash session.

Today, markets will primarily be waiting for the announcement of tariff rates by the Trump administration at 20:00 GMT. However, earlier we will also learn the first labor market report for March — ADP.

Yesterday, in the late afternoon in the U.S., fresh information appeared regarding American trade policy. The Wall Street Journal reported that the Treasury Department and the Department of Commerce have prepared a new option for President Trump, involving a broad-based tariff hike on a selected subset of countries. This increase would not exceed 20%.

U.S. Treasury Secretary Bessent stated that the tariffs would act as a cap. These tariffs represent a maximum level, and the countries covered may later take steps to reduce them. This announcement caused a slight increase in currencies such as EUR, AUD, and NZD, although most of the moves were later reduced.

Deputy Governor of the RBA, Christopher Kent, announced a 5 basis point increase in the rate for new open market operations (OMO) repo, which now stands 10 basis points above the target cash rate. He emphasized that this technical change does not affect monetary policy. Nonetheless, the AUD is gaining during the session.

Governor of the Bank of Japan, Ueda, speaking in Japan's parliament, commented on the potential effects of U.S. tariffs. He warned that depending on their scale, they could significantly impact trade activity between countries. The Japanese yen reacted minimally, and USDJPY is currently gaining 0.18% to around the level of 149.8800.

In the U.S., Chicago Fed President Austan Goolsbee gave a television interview in which he stated that the hard data on the U.S. economy remains solid, but confidence is collapsing drastically. He pointed out the difference between hard and soft data, warning that tariffs constitute a supply shock and may lead to broader inflationary effects if they influence consumer and business behavior.

Building permits in New Zealand rose by 0.7% month-over-month in February, down from a previous increase of 2.6%. Year-over-year, permits fell by 7.8%, marking a sharp deterioration compared to the 10.6% increase in January. The NZD reacted barely at all, with moves mainly driven by tariff-related information.

In Europe, the German banking association has lowered its economic growth forecast for 2025 to just 0.2%, down from the previous level of 0.7%. However, growth is expected to rebound to 1.4% in 2026, supported by government spending initiatives.