Markets Overview

  • ASX SPI 200 futures up 0.6% to 8,180.00
  • Dow Average up 1.4% to 43,840.91
  • Aussie down 0.4% to 0.6211 per US$
  • US 10-year yield fell 5.2bps to 4.2082%
  • Australia 3-year bond yield fell 4.9 bps to 3.74%
  • Australia 10-year bond yield fell 4.4 bps to 4.29%
  • Gold spot down 0.7% to $2,857.83
  • Brent futures down 1.0% to $72.81/bbl

Economic Events

  • 09:00: (AU) Feb. S&P Global Australia PMI Mfg, prior 50.6
  • 11:00: (AU) Feb. Melbourne Institute Inflation, prior 0.1%
  • 11:00: (AU) Feb. Melbourne Institute Inflation, prior 2.3%
  • 11:30: (AU) 4Q Company Operating Profit QoQ, est. 1.8%, prior -4.6%
  • 11:30: (AU) 4Q Inventories SA QoQ, est. 0%, prior -0.9%
  • 11:30: (AU) Feb. ANZ-Indeed Job Advertisements , prior 0.2%

The euro gained in early trading as European leaders scrambled to secure Ukraine amid concerns of an American pullback. Asian stocks are set for a mixed start as President Donald Trump prepares to slap long-promised tariffs on Canada and Mexico, while increasing a levy on China.

The common currency rose 0.3% against the dollar, outperforming major peers and paring some of last week’s loss. The Polish zloty and Romanian leu also gained. Asian equities are set for a mixed open, with futures in Australia and Japan indicating early gains after US stocks climbed on Friday, while Chinese and Hong Kong shares are set to decline.

“Plans for the European countries to take more responsibility for funding the war in Ukraine and upping defence spending” should be euro positive, said Dane Cekov, a senior macro and FX strategist at Sparebank 1 Markets AS. “Still, we expect the US dollar to continue on a strong note as the introduction of tariffs continues to include more countries and sectors in the months to come.”

Markets are starting the week with another geopolitical one-two punch as European leaders pledge to increase defense spending and assemble what Britain called a “coalition of the willing” to secure Ukraine. That follows a fiery Oval Office clash between Trump and Ukrainian Prime Minister Volodymyr Zelenskiy over the prospects of a ceasefire with Russia without American security guarantees.

Traders are also awaiting news of any last minute negotiations to avoid US trade tariffs on Mexican and Canadian goods, as well as a further 10% tax on Chinese imports, that are due to come into effect this week.

“For now, geopolitics mainly contribute to the flood of news and uncertainty that leave investors hesitant about deploying capital or increasing risk in their portfolios,” said Raphael Thuin, head of capital market strategies at Tikehau Capital. “And there are indications that this uncertainty is beginning to affect the real economy, reinforcing the prevailing climate of caution.”

Bitcoin rallied on Sunday after President Donald Trump talked up his plan for a strategic crypto reserve, which includes XRP and ADA tokens. The move recoups some of February’s 18% loss, its worst since June 2022.

The S&P 500 rose 1.6% Friday while Treasuries extended February’s rally, with two-year yields dropping below 4% after data showed US inflation isn’t heating up. The January core personal consumption expenditures price index, which excludes food and energy items, rose 0.3% from December. From a year ago, it increased 2.6%, matching the smallest annual increase since early 2021.

In Asia this week, traders’ hopes are running high that a ramp-up in fiscal spending will be announced at China’s National People’s Congress to bolster domestic demand, offsetting the risk of US tariffs and sustain this year’s blistering rally. The Chinese yuan has strengthened about 0.6% this year while a gauge of the nation’s equities has jumped more than 12%, almost five times the gain of a gauge of global stocks, according to data compiled by Bloomberg.

“Counter to the negative this week is the anticipated positive messaging from China CPPCC and NPC meeting,” said Wee Khoon Chong, a senior strategist at BNY. “We are reasonably confident the AI-driven optimism and momentum in Hang Seng is here to stay in the near-term, but a period of consolidation is warranted following the record year-to-date gains.”

Elsewhere, growth data in Australia as well as inflation readings in Latin America are due this week. The European Central Bank will give a policy decision after inflation readings in France and Italy last week supported the case for further cuts. Trump will also address a joint session of Congress just as two polls suggest he’s losing support from Americans concerned about the economy and inflation.

In commodities, oil slid 0.8% to settle below $70 US a barrel on Friday after Trump’s tariff threats cloud the outlook for energy demand. Gold fell.