Markets Overview
- ASX SPI 200 futures down 0.8% to 8,405.00
- Dow Average down 1.0% to 44,303.40
- Aussie down 0.2% to 0.6268 per US$
- US 10-year yield rose 6.1bps to 4.4947%
- Australia 3-year bond yield rose 4.8 bps to 3.78%
- Australia 10-year bond yield rose 4.1 bps to 4.36%
- Gold spot up 0.2% to $2,861.07
- Brent futures up 0.5% to $74.66/bbl
Economic Events
Asian markets are set for a shaky open after President Donald Trump pledged tariffs on all imports of steel and aluminum, on top of his plan for other measures later this week. Commodity currencies dropped in early trading while Asian stocks are primed for losses.
The Australian, New Zealand and Canadian dollars as well as the euro fell in early trading after Trump’s comments, while equity futures in Australia, Japan and Hong Kong are all pointing down. Contracts in mainland China and a gauge of US-listed Chinese shares rose on Friday as Trump said he would maintain the duty-free exception for low-value packages from China until systems are in place to collect the tariff revenue.
Trump said the 25% levy on steel and aluminum will be announced Monday and apply to imports from all countries, though he didn’t specify when they would take effect. His latest comments add to already jittery markets in anticipation of Trump unveiling fresh measures on “everyone” and Federal Reserve Chair Jerome Powell’s upcoming semiannual congressional testimony.
“Markets continue to react to Trump policy shifts rather than economic data,” Bob Savage, head of markets strategy and insights at BNY wrote in a note to clients. “The take from Fed Chair Powell will be critical in judging the costs of tariffs and other policy shifts on easing plans.”
The S&P 500 index slumped 1% on Friday amid the heightened tariff angst and after data showed a slide in consumer sentiment amid concern over inflation. The dollar climbed while US Treasuries fell across the curve after jobs figures highlighted a moderating — yet healthy — labor market.
Nonfarm payrolls increased by 143,000 last month after upward revisions to the prior two months. The unemployment fell to 4.0% from 4.1% while hourly wages climbed 0.5%.
Powell will be making his semi-annual testimony at a time when officials are signaling they’re not in a hurry to further ease policy. Inflation data later this week may help buttress those arguments and underpin market pricing for just one US rate cut this year.
In Asia, Chinese shares will be closely watched Monday as the country’s growing clout in artificial intelligence space has sparked a wave of optimism toward the nation’s tech companies. The rally could be threatened as temporary spending boom around the Lunar New Year holiday, which caused consumer inflation to accelerate in January for the first time since August, masked deflationary pressures in China’s economy.
“Chinese consumers remain cautious and the trend of consumption downgrading persists,” Goldman Sachs economists including Andrew Tilton wrote in a note to clients. The seasonal boost in China’s inflation is likely to turn into a seasonal drag in February, they wrote.
Elsewhere, South Africa’s rand fell in early trading, underperforming global peers, after the US froze all aid to the nation over what Trump falsely claimed were rights violations stemming from a new land-expropriation law, as well as its allegations of genocide against Israel. South Africa’s foreign ministry in a statement Saturday expressed “great concern that the foundational premise of this order lacks factual accuracy.”
In commodities, oil slid 2.1% last week on concerns Trump’s tariffs on China will sap demand, outweighing his first round of sanctions against Iran. Gold climbed a sixth straight week to a fresh record, matching the longest winning streak since Jan. 2023.
