Financial markets made a mixed start on Monday with US stock futures rising but the dollar wavering ahead of a week driven by data, Chinese earnings and the threat of steep US tariff hikes on the horizon.
S&P 500 futures were up about 0.6% in the Asia morning and Nasdaq 100 futures rose 0.8%. Japan’s Nikkei and Hong Kong’s Hang Seng climbed about 0.2% The euro, which fell slightly last week, was up about 0.2% at $1.0835 in early trade. In emerging markets, Turkey’s lira was on a knife’s edge as the jailing of President Tayyip Erdogan’s main rival unsettles investors.
Shares in Australia-listed fibre-cement maker James Hardie fell 12% after it said it would buy US outdoor building products maker AZEK Company for $8.8 billion in cash and stock.
The week holds global purchasing managers index gauges, the US Federal Reserve’s preferred inflation reading, inflation data in Australia and Japan, a budget update in Britain and major earnings in China.
But it is likely to be updates on US President Donald Trump’s plans to for global reciprocal tariffs from April 2 that drives markets, and after a volatile month for stocks, bonds and currencies, analysts said there is no obvious trade ahead.
“It’s very difficult to really devise a structural playbook,” said Chris Weston, head of research at Pepperstone.
“You’ve got to put your mind into the head of the consumer and households,” he said, since it has been fears of a slowdown in the world’s biggest economy that has led to weeks of selling dollars and stocks and a strong rally for Treasuries.
“Anything that feeds into this higher probability of recession, higher probability of a stagflationary environment … or that price pressures aren’t transitory is where we start to get panicky a bit.” Trump has vowed to impose a complicated barrage of tariffs next week, the details of which are not clear save that they are to be calculated to reflect the impact of foreign tariffs as well as foreign value-added taxes on imports.
The S&P 500 eked out a gain on Friday after Trump hinted at flexibility, but after a rollercoaster first two months in power – including tariff hits on China, Mexico and Canada – traders are shy of betting that Trump is ready to cut deals.
Ten-year US Treasury yields have fallen nearly 40 basis points from mid-February highs and were last steady at 4.27% and investors have been drawn abroad from US stocks, with sharp rallies in Hong Kong and Europe as Wall Street fell.
Hong Kong shares are up 18% so far this year, the largest gain of any major market, but a drop of 4.4% over two sessions late last week pointed to a pause in the flow of money while traders consider their – and Trump’s – next moves.
Earnings at automaker BYD, video platform Kuaishou as well as Chinese banks and several property developers will be in focus. In the US, discount retailer Dollar Tree and up-market athletic clothier Lululemon are on the calendar.
Gold sat just shy of last week’s record high, buying $3,021 an ounce, while bitcoin held at $85,860.
“Cash and safe havens remain the counterbalance to any larger shift in strategy,” said Bob Savage, head of markets macro strategy at BNY in a note to clients.
“We expect a series of diplomatic meetings to avert extreme tariffs eventually, but not by April, leaving the sequencing concerns over Trump’s policy shifts continuing to move markets with ongoing economic uncertainty.”
Copper prices rose on Monday as traders bought to ship to the United States, where President Donald Trump is threatening to impose tariffs on imports of the industrial metal.
Benchmark copper on the London Metal Exchange (LME)traded 1.7% higher at $10,027 a metric tone in official rings after touching $10,044.50. Last week it hit $10,046.50 for its highest since October 3.
On COMEX, meanwhile, copper prices jumped to a record high of $5.1845 per lb, about $11,430 a tone. Traders said that movement of copper from the LME system to the United States can be seen in inventories held by warehouses in the exchange’s network around the world.
Copper stocks in LME warehouses have dropped by 18% to 221,775 tonnes over the past four weeks. Cancelled warrants – metal earmarked for delivery – are at 50% of the total, suggesting a further 111,000 tonnes is due to leave LME warehouses.
Last month Trump ordered an investigation into potential new tariffs on copper imports to rebuild US production of a metal critical to electric vehicles, military hardware, the power grid and many consumer goods.
Trump’s tariffs are intended to encourage local production of metal, but permits can be difficult to obtain for these operations and smelter construction can take years.
“The policy is intended to stimulate investment in the US industrial base – boosting local production and conversion capacity,” said Liberum analyst Tom Price.
“Perhaps in several years, the industry may respond. For now though, it has no choice but to continue importing these metals – and somehow accept, or pass on, the trade’s new tariff cost.” Traders said that a Bloomberg report saying commodity trader Mercuria was estimating that 500,000 tonnes of copper was heading to the United States was also driving up prices.
Agencies
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