US equity futures tumbled after-hours on Trump's tariff announcement - Newsquawk Asia-Pac Market Open

• US stocks were choppy heading into US President Trump's tariff announcement as markets reacted to source reports and ultimately finished in the green amid some positioning heading into the announcement, while futures then fluctuated after hours with an initial bullish reaction seen as reports noted the US is to apply a 10% baseline tariff to trading partners, although sentiment then soured as President Trump unveiled the individual reciprocal tariff amounts for each country which were essentially half of what countries were charging the US with a 20% tariff on EU, 34% tariff on China, 24% on Japan and 10% on the UK.
• USD weakened heading into the tariff announcement but was then choppy on the announcement in reaction to the initial report that the US is to set the baseline tariffs at 10% which also spurred a risk on reaction across asset classes, while markets then reversed course after Trump unveiled the actual reciprocal tariff levels which were set at half of what other countries are charging the US amounting to a 20% tariff for the EU, 34% for China, 24% for Japan, 10% for the UK, 10% for Australia, 26% for India and 30% for South Africa.
• Looking ahead, highlights include Australian Services & Composite PMIs, Australian Trade Data, Chinese Caixin Services & Composite PMIs, RBA Financial Stability Review, Supply from Japan, Holiday Closures in Taiwan and Indonesia.

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LOOKING AHEAD

• Highlights include Australian Services & Composite PMIs, Australian Trade Data, Chinese Caixin Services & Composite PMIs, RBA Financial Stability Review, Supply from Japan, Holiday Closures in Taiwan and Indonesia.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks were choppy heading into US President Trump's tariff announcement as markets reacted to source reports and ultimately finished in the green amid some positioning heading into the announcement, while futures then fluctuated after hours with an initial bullish reaction seen as reports noted the US is to apply a 10% baseline tariff to trading partners, although sentiment then soured as President Trump unveiled the individual reciprocal tariff amounts for each country which was essentially half of what countries were charging the US with a 20% tariff on EU, 34% tariff on China, 24% on Japan and 10% on the UK.
• SPX +0.67% at 5,671, NDX +0.75% at 19,582, DJI +0.56% at 42,225, RUT +1.65% at 2,045.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said for nations that treat them badly, they will calculate the total, including non-monetary barriers and will charge them half which won't be reciprocal, while he announced the US is to apply a 20% tariff on imports from EU, 34% tariff on imports from China, 26% tariff on imports from India, 25% tariff on imports from South Korea, 10% tariff on imports from UK and 24% tariff on imports from Japan. Trump also stated that the baseline tariff is 10% and announced 25% auto tariffs
• US President Trump’s automobile tariffs are due to take effect 12:01EDT on April 3rd, according to the Federal Register.
• US President Trump’s administration is considering revocation of tariff exemptions for cheap shipments from China, according to Reuters citing a source. CBS reported that President Trump was considering announcing today his plan for what he calls the “External Revenue Service," and is aiming to again charge tariffs on low-value merchandise shipped from China to individual US consumers. It was also noted that a US loophole currently allows duty-free shipments of Chinese goods worth less than USD 800.
• WSJ confirmed that US Treasury Secretary Bessent's message to lawmakers was today's tariffs could go down and are not likely to go up, although the WSJ reporter noted that "Whether Trump agrees with this assessment, however, remains to be seen".
• Wall Street executives who have been dealing with the White House and President Trump himself said they are being told the goal of the new tariff regime will be to cut reciprocal deals to lower tariffs with trading partners, according to FBN's Gasparino.
• WSJ's Timiraos posted that Treasury Secretary Bessent's comments, taken at face value, imply that there will be no US retaliation against foreign retaliation.
• US Senate appears to have the votes to end certain tariffs on Canadian goods, according to CNBC reports.
• Mexican President Sheinbaum said they will not impose tit-for-tat tariffs and Mexico will gradually comply with the US water treaty after criticism from the US State Department.
• EU is reportedly planning emergency measures to guard the economy against US President Trump’s tariffs and is working on short-term support proposals alongside plans to advance competitiveness and reform in key sectors, while measures will be dependent on the US announcement, according to Bloomberg.
• UK Chancellor Reeves said they will not be rushing into any quick response to US tariffs, while she added let's see how others respond first and that the UK will not jeopardise the possibility of an economic deal with the Trump administration by “posturing” in response to US tariffs.
• China is said to restrict companies from investing in the US as it aims to give Beijing more leverage for potential trade negotiations with the Trump administration, according to Bloomberg citing sources. However, it was noted that there is no sign existing commitments by Chinese companies in the US and elsewhere, or China’s purchases and holdings of financial products including US Treasuries, would be affected.
• Indian carmakers are lobbying for an import tariff cut on electric cars to be delayed until 2029, according to Reuters citing sources.

NOTABLE HEADLINES

• US President Trump reportedly told his inner circle, including members of his Cabinet, that Elon Musk (TSLA) will be stepping back in the coming weeks from his current role as governing partner, according to Politico. However, the White House Press Secretary posted on X shortly after that this “scoop” is garbage and noted that Musk and Trump have both publicly stated that Elon will depart from public service as a special government employee when his incredible work at DOGE is complete.

DATA RECAP

• US Factory Orders MM (Feb) 0.6% vs. Exp. 0.5% (Prev. 1.7%, Rev. 1.8%)
• US Durable Goods, R MM (Feb) 1.0% (Prev. 0.9%)
• US ADP National Employment (Mar) 155.0k vs. Exp. 115.0k (Prev. 77.0k, Rev. 84k)

FX

• USD weakened heading into the tariff announcement but was then choppy on the announcement in reaction to the initial report that the US is to set the baseline tariffs at 10% which also spurred a risk on reaction across asset classes, while markets then reversed course after Trump unveiled the actual reciprocal tariff levels which were set at half of what other countries are charging the US amounting to a 20% tariff for the EU, 34% for China, 24% for Japan, 10% for the UK, 10% for Australia, 26% for India and 30% for South Africa.
• EUR was firmer on the day and briefly rose above the 1.0900 handle following reports the EY planning emergency measures to guard the economy from Trump's tariffs with measures to be dependent on the US announcement, although the single currency then gave back most of the gains on Trump's tariff announcement with the EU subject to 20% reciprocal tariffs.
• GBP benefitted following the tariff announcement with the UK just subject to the 10% baseline tariff.
• JPY was choppy but ultimately strengthened amid the haven flows following the Trump tariff announcement.

FIXED INCOME

• T-notes traded off the risk environment with ADP ignored and potential profit-taking heading into Trump's tariff announcements.

COMMODITIES

• Oil prices ultimately gained on 'Liberation Day' with price action influenced by risk sentiment and geopolitics but with gains capped after bearish inventory data.
• US EIA Weekly Crude Stocks w/e 6.165M vs. Exp. -2.0M (Prev. -3.341M)
• OPEC+ JMMC meeting is initially scheduled for April 5th, although one source said this might take place on Thursday (April 3rd).
• US Commerce Department revised aluminium duties to add beer and empty aluminium cans.

GEOPOLITICAL

MIDDLE EAST

• US President Trump is reportedly seriously considering Iran's offer of indirect nuclear talks, while at the same time significantly boosting US forces in the Middle East in case the US opts for military strikes, although no decisions have been made, according to Axios.
• US President Trump is reportedly about to bomb Iran as top Israeli sources revealed a planned attack on nuclear sites and delivered chilling 'war is coming' warning", according to Daily Mail's Dan Hodges. The report noted that "according to several senior political, military and diplomatic sources, the United States and Israel are preparing to launch a strike on Iran that will finally eradicate the threat posed by the country's nuclear weapons programme".
• Iranian Deputy Foreign Minister discussed the situation with the negotiation process on Iran's nuclear programme with Russia's Ryabkov, according to RIA.
• Iran reiterated they are ready for indirect nuclear talks with the US.

RUSSIA-UKRAINE

• US issued new Russia-related sanctions, according to the Treasury Department website.
• Russian negotiator Dmitriev is expected to meet with top US official Witkoff for discussions on strengthening relations, according to CNN citing sources.
• Russia's Kremlin said Russia is telling the US that it is sticking to the energy strikes moratorium and Ukraine still isn't joining it, while it added that contacts continue with the US on various levels.

ASIA-PAC

NOTABLE HEADLINES

• The decision regarding TikTok could come as soon as today, according to CNBC’s Faber. It was separately reported that Amazon (AMZN) is said to be making a bid to buy TikTok in the US, according to NYT. Furthermore, the Trump team has weighed a deal to save TikTok, leaving the algorithm in Chinese ownership, while the White House has examined a menu of options to avert a TikTok ban deadline set for Saturday, according to the Washington Post.
• US Agriculture Secretary Rollins said US President Trump is eyeing Chinese ownership of 350k acres of American farmland, while Rollins said the holdings are a threat to national security and future economic prosperity.
  - China's Vice Finance Minister said they are willing to correctly deal with disputes and frictions with the EU via consultations and dialogue, according to state media.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Reeves said she will not need to repeat a tax-raising budget on the scale of October 2024.
• ECB's President Lagarde said inflation is very close to the target but there is still some work to do.
• ECB's Holzmann said rates are at a neutral level and there is no reason to become accommodative.
• ECB's Rehn said the ECB is not committing to any particular path and disinflation is on track, while the growth outlook weakened. Rehn added that the Bank will maintain complete freedom of action and trade protectionism is a key risk to the economic outlook.
• ECB's Schnabel said the US is so important that what happens in the US can have an impact on its decisions.
• ECB's Villeroy said the latest EZ inflation data gives them the confidence to cut rates again soon and Trump tariffs shouldn't significantly impact disinflation in Europe, while he added that US tariffs shouldn't affect disinflation much.
• France's Foreign Minister said the window of opportunity for a nuclear agreement with Iran is narrow and if a deal cannot be reached with Iran then a military confrontation seems to be almost inevitable.