Stocks Trade in Tight Range, US Copper Hits Record: Markets Wrap
Asian stocks traded in a narrow range on Wednesday as investors grappled with uncertainty surrounding President Donald Trump’s upcoming tariffs and weaker US consumer confidence. The MSCI Asia Pacific Index managed to eke out a 0.2% gain after initially losing momentum. Meanwhile, US copper prices surged to a record high as traders factored in the potential impact of hefty import tariffs.
US and European equity-index futures remained steady, while the 10-year US Treasury yield saw a slight uptick. The dollar, after a four-day rally, saw little change in its value. The Trump administration hinted that the forthcoming wave of tariffs may be more targeted and less extensive than initially feared. Trump himself mentioned that while he prefers fewer exceptions, he may be more lenient in his approach to tariffs.
Despite some reassurance from Trump’s recent comments on the upcoming tariffs, concerns about the US economy persist following Tuesday’s underwhelming economic data. However, there was a glimmer of optimism as strategists from Morgan Stanley and Goldman Sachs raised their outlook for Chinese stocks, citing factors such as improving earnings forecasts.
“There’s a heightened sense of anxiety in the markets leading up to next week’s tariff announcements,” said Kyle Rodda, a senior market analyst at Capital.com. “However, some of that anxiety has been alleviated by the President’s more targeted approach to trade restrictions.”
On April 2, Trump is expected to announce a new wave of tariffs, dubbed “Liberation Day” tariffs, which are seen as a form of retaliation against levies imposed by other countries. The tariffs are likely to be more focused than the global effort initially floated by Trump.
In terms of market movements, the Hang Seng Tech Index rebounded by 1.6% after a recent slump, with strategists from Morgan Stanley and Goldman Sachs expressing optimism about the future performance of Chinese stocks. Ling, a managing director at Union Bancaire Privee, noted that Chinese stocks are still attractively valued, supported by government policies and a thriving innovation sector.
In geopolitical news, the US and Russia agreed to a ceasefire in the Black Sea, with the US offering to provide support to Russia in various sectors. However, the Kremlin has outlined conditions for its involvement, including sanctions relief.
In Europe, concerns are mounting about the sustainability of the equity rally, with valuations becoming less appealing. The Euro Stoxx 50’s P/E ratio has surpassed its five-year average, driven by Germany’s fiscal stimulus efforts. With tariffs looming, industries such as healthcare, industrials, and autos are facing heightened risks.
Former ECB President Mario Draghi praised Germany’s decision to increase defense spending but warned of implementation risks. In Turkey, President Erdogan is taking measures to quell protests and stabilize financial markets while cracking down on dissent.
US consumer sentiment surveys have been lackluster, with fears of inflation stemming from tariffs. Companies are warning of higher prices and reduced demand, fueling concerns about stagflation and a potential recession.
In the commodities market, oil prices rose following reports of a decline in US inventories, while gold remained near record highs.
Overall, market movements remained relatively subdued, with slight fluctuations in stock indices, currency values, bond yields, and commodity prices. The uncertainty surrounding tariffs and economic data continues to weigh on investor sentiment, underscoring the need for caution in the current market environment.
