Markets Overview

  • ASX SPI 200 futures down 0.3% to 8,152.00
  • Dow Average down 0.2% to 41,218.83
  • Aussie up 0.5% to 0.6468 per US$
  • US 10-year yield rose 3.7bps to 4.3453%
  • Australia 3-year bond yield rose 5.7 bps to 3.39%
  • Australia 10-year bond yield rose 5 bps to 4.27%
  • Gold spot up 2.9% to $3,334.07
  • Brent futures down 1.6% to $60.30/bbl

Economic Events

  • 11:00: (AU) Australia to Sell A$300 Million 4.75% 2054 Bonds
  • 11:30: (AU) March Building Approvals MoM, est. -1.5%, prior -0.3%
  • 11:30: (AU) March Private Sector Houses MoM, prior 1.0%
  • 11:30: (AU) March Household Spending YoY, est. 3.9%, prior 3.3%
  • 11:30: (AU) March Household Spending MoM, est. 0.2%, prior 0.2%

Traders will be keeping a close eye on Asian foreign exchange developments on Tuesday, with the reverberations of US President Donald Trump’s trade war jolting the greenback and threatening to upend currency markets.

Following a session on Wall Street where the S&P 500 halted its longest rally in about 20 years, equity markets in China are set to reopen after a holiday amid a cautious investor mood. Equity-index futures for Sydney pointed down and those for US benchmarks were little changed early Tuesday, while Japanese markets remained shut.

The greenback weakened further on Monday against most major currencies, as speculation around potential trade deals sparked an extraordinary spike in Taiwan’s dollar and reverberated across global foreign exchange markets. Elsewhere, Hong Kong authorities spent a record amount in an attempt to defend the foreign-exchange peg.

The yen rallied some 0.9% on Monday, leading the advance among a Group-of-10 peers, while the euro pushed above the 1.13 per dollar mark.

“I would be cautious about leaning in too much into this appreciation as central banks in Taiwan, Malaysia and especially Hong Kong have significant means to buy dollars if they need to,” said Leah Traub, a portfolio manager and head of the currency team at Lord Abbett & Co.

In the US, a historic stock-market run came to a halt despite data showing a pick-up in growth at US service providers. While Trump suggested some trade deals could come as soon as this week, there was no indication of an imminent accord with China.

Investor hopes that the president may start to pull back from launching new fronts on his trade war were dashed when he announced plans to impose a 100% tariff on films produced overseas — Netflix Inc. and Warner Bros. Discovery Inc. fell about 2%.

In late hours, Ford Motor Co. pulled its financial guidance and said auto tariffs will take a toll on profit. Palantir Technologies Inc. sales forecast fell short of Wall Street’s high hopes.

In commodities, oil steadied on Tuesday after sinking in its previous session after OPEC+ agreed to an output increase. Gold surged 2.9% on Monday as haven buying returned.

Attention will soon shift to Wednesday’s Federal Reserve decision after bond traders dialed back rate-cut bets that had steadily mounted as Trump’s trade war unleashed havoc in financial markets.

After piling into short-term Treasuries, anticipating the Fed would start easing policy soon to contain the fallout, traders reversed course. Two-year yields rose for a third consecutive session – the longest run since December – as traders bet policymakers will remain in wait-and-see mode until there’s more clarity on the impacts of tariffs.

“Uncertainty rules amid a trade war and the ever-changing landscape of tariffs, but with the hard data on consumer spending and employment still hanging in there, the Fed will remain firmly planted on the sidelines,” said Greg McBride at Bankrate.

Recent economic data seems to have assuaged market concerns of a recession, but the outcome of Trump’s tariff war has yet to be felt. For several market observers, levies will eventually slow the US economy as supply chains are upended and consumer confidence tumbles, with the increases in duties possibly delivering at least a temporary inflation shock.

“Clearly, it really is the uncertainty and the volatility — and so that is how clients are feeling globally, domestically. And as part of that, they’re trying to figure out: Is there opportunity in this market?” Racquel Oden at HSBC said at an event. “We’re seeing all these market swings, each day there’s a new report that may pivot things in the economy.”