Morning wrap (31.03.2025)

Wall Street closed the Friday session with significant losses (S&P 500: -2%, DJIA: -1.7%, Nasdaq: -2.7%, Russell 2000: -2.05%).

The source of the negative sentiment was a higher-than-expected reading of the core PCE inflation, a record-low consumer confidence index, and growing concerns over the upcoming "counter tariffs" that Donald Trump is expected to announce on April 2.

Markets in Asia and the Pacific opened the new week with a sell-off (HSCEI: -1.5%, Shanghai SE Composite: -1%, Nikkei 225: -4%, Kospi: -2.9%, S&P/ASX200: -1.5%) amid fears about the consequences of the trade war.

The collective MSCI Asia Pacific index (-2%) is most weighed down by the stocks of Asian tech giants: TSMC, Samsung, Tencent, and Alibaba.

A significant exception is the shares of state-owned car manufacturers in China (Dongfeng Motor: +6%, Changan Auto: +2%), after the government announced plans for mergers and restructuring in the sector.

Industrial production in Japan is struggling with stagnation. The index rose only 0.3% YoY (forecast: 1.2%, previously: 2.2%), while on a MoM basis, we observe a rebound above expectations following a very weak January (2.5%, forecast: 2%, previously: -1.1%).

Chinese PMIs for March came in slightly above expectations. The services reading came in at 50.8 (forecast: 50.6), while the manufacturing index was 50.5 (forecast: 50.4).

On the forex market: the dollar extends its correction from Friday (USDIDX: -0.2%), the Japanese yen dominates G10 gains, benefiting from concerns about tariffs and moves in the dollar (USDJPY: -0.57%), and EURUSD rises above 1.08 (+0.12%).

Gold shows no signs of slowing down, rising 0.9% to $3111 per ounce, while silver returns to gains (+0.6% to $34.32 per ounce).

Oil loses some ground amid Trump's threats that the US will impose new tariffs on countries importing Russian oil if Putin does not cooperate in efforts to end the war in Ukraine. (Brent: -0.3%, WTI: -0.5%).

The largest cryptocurrencies continue their declines: Bitcoin loses 0.5% to $82,115, Ethereum falls 0.3% to $1808, while Solana (+2%) and Polygon (+1%) contracts are trading in the green.

The key macro data today will include retail sales in Germany, and regional PMI reports from the US.