US stocks suffered their worst day since 2020 amid Trump tariff turmoil - Newsquawk Asia-Pac Market Open

• US stocks tumbled in the wake of Liberation Day after President Trump announced more aggressive tariffs than expected which resulted in the largest losses on Wall Street since 2020 and saw the S&P 500 slip into correction territory with its constituents wiping out USD 2.4tln in value, while the vast majority of sectors were pressured with Energy, Tech, Consumer Discretionary and Industrials down by more than 5% on the day.
• USD slumped after US President Trump's tariff announcement was more aggressive than many had expected which stoked growth concerns with BofA warning that tariffs could push the US economy to "the precipice of recession", while Barclays sees a "high risk" of the US economy falling into a recession this year. There were also a slew of data releases including the large miss on ISM Non-Manufacturing although the data releases took a back seat to the tariff-related turmoil and with participants now awaiting the latest NFP report and comments from Fed Chair Powell on Friday.
• Looking ahead, highlights include Japanese Household Spending, Philippines CPI, Singapore Retail Sales, Supply from Australia, Holiday Closures in China, Hong Kong, Taiwan & Indonesia.

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LOOKING AHEAD

• Highlights include Japanese Household Spending, Philippines CPI, Singapore Retail Sales, Supply from Australia, Holiday Closures in China, Hong Kong, Taiwan & Indonesia.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks tumbled in the wake of Liberation Day after President Trump announced more aggressive tariffs than expected which resulted in the largest losses on Wall Street since 2020 and saw the S&P 500 slip into correction territory with its constituents wiping out USD 2.4tln in value, while the vast majority of sectors were pressured with Energy, Tech, Consumer Discretionary and Industrials down by more than 5% on the day.
• SPX -4.84% at 5,397, NDX -5.41% at 18,521, DJI -3.98% at 40,546, RUT -6.59% at 1,911.
• Click here for a detailed summary.

TRADE/TARIFFS

• US President Trump said the world is the world is looking for ways to make a deal on tariffs.
• US Commerce Secretary Lutnick said there is no chance US President Trump will back off from tariffs and that Trump will negotiate only if other countries fix their tariffs and non-tariff barriers. Lutnick also said they do not have a plan about the dollar and if the dollar is cheaper, it is easier to export.
• US Commerce Secretary Lutnick repeated that Europe does not treat US products or companies fairly and noted the only way these rates are going up is if countries retaliate. Furthermore, Lutnick responded 20% fentanyl tariffs and the regular trade deficit number is 34% to confirm the total is 54% when asked what is the tariff number on China, while he also noted Section 301 products have separate 25% tariffs, so some Chinese products will have a 79% tariff but added that the 20% China tariff would drop if Chinese President Xi offers to cut fentanyl.
• White House is floating the idea of potentially launching a tariff investigation into critical minerals imports, according to Bloomberg.
• Washington's Post Jeffrey Stein posted on X that sources said "The White House's internal talking points tell surrogates that Trump's new global tariff regime should NOT be characterized as a starting point for negotiations" and that President Trump is also telling advisers they're not about setting up talks.
• US Senators Grassley and Cantwell have introduced legislation to require Congress to approve all new tariffs within 60 days.
• Canadian PM Carney said Canada will impose 25% tariffs on all vehicles imported from the US that are not compliant with the USMCA trade deal and they will fight US tariffs until they are removed. Carney stated that previously announced retaliatory tariffs will remain in effect and they would react energetically to any new US tariffs, while he also said that they need to reset their overall relationship with the US.
• Mexican President Sheinbaum said she does not expect a call with US President Trump to happen soon, while she added that tariffs linked to fentanyl and migration could drop to 12% from 25% with greater collaboration.
• EU Trade Chief Sefcovic said the Bloc is ready with countermeasures and that the EU will diversify trade partnerships around the world.
• EU senior official said EU Members are set to vote on April 9 on countermeasures to US steel and aluminium tariffs, while a senior official said that the first set of retaliatory tariffs on US goods will be implemented on April 15th and the second set won't come into effect until mid-May, according to WSJ.
• Germany and France push for a more aggressive tariff response, advocating for a forceful retaliation that could strengthen the EU's negotiating power, according to Bloomberg.
• Eurasia Group said French President Macron calls on big European businesses to freeze all investments in the US in retaliation for the "brutal and unjustified" import duties imposed by US President Trump.
• Spanish PM Sanchez said they have asked the European Commission to reinforce trade links with the rest of the world and Europe needs to deploy a package of counter-tariffs and other measures, while he added they are responding to US tariffs with a EUR 14.1bln plan to protect the Spanish economy.
• Indian Trade Ministry source said India is considering providing help to export sectors affected by US tariffs and India will hold virtual meetings with the US on a bilateral deal this month, according to Reuters.
• WTO chief said estimates suggest that US tariffs, coupled with those introduced since the start of the year, could lead to an overall contraction of around 1% in global merchandise trade volumes this year, while the WTO chief is deeply concerned about this decline and the potential for escalation into a tariff war.

NOTABLE HEADLINES

• Fed Vice Chair Jefferson (voter) said there is no need to be in a hurry on policy rate adjustments and the current policy rate is well-positioned to deal with risks and uncertainties. Jefferson said they could retain current policy restraint for longer, or ease policy, depending on inflation progress and the job market, while the policy rate is now somewhat restrictive. Jefferson also said there is still substantial uncertainty around trade and uncertainty can weigh on spending and investment decisions, while he added it will be important to take their time and think about the impact.
• Fed's Cook (voter) said it is appropriate to maintain current policy for now while watching data and now is the time for Fed to be ‘patient but attentive’.Cook also said the economy has entered a period of uncertainty, while she added that reduced uncertainty and easing inflation would facilitate rate cuts.
• US President Trump posted on Truth, seemingly in reference to the US, that it will be "far stronger, bigger, better and more resilient than ever before".
• US White House Press Secretary Leavitt said tax cuts are the "second step" of Trump's agenda.
• US VP Vance said things will not be fixed overnight but noted taxes will be cut and Americans will have "more money in their pockets", while he added Elon Musk will continue to be an advisor to DOGE once he steps down from his current role on DOGE, according to Fox News.
• US Commerce Secretary Lutnick said in the medium and long term markets will do very well, according to CNBC.
• US Senate panel has voted to advance the nomination of Paul Atkins as chair of the SEC.
• Barclays said it sees a "high risk" of the US economy falling into a recession this year, while Bank of America said if the latest US tariffs remain, it could push the US economy to "the precipice of recession".

DATA RECAP

• US S&P Global Services PMI Final (Mar) 54.4 (Prev. 54.3)
• US S&P Global Composite PMI Final (Mar) 53.5 (Prev. 53.5)
• US ISM N-Mfg PMI (Mar) 50.8 vs. Exp. 53.0 (Prev. 53.5)
• US ISM N-Mfg New Orders Idx (Mar) 50.4 (Prev. 52.2)
• US ISM N-Mfg Employment Idx (Mar) 46.2 (Prev. 53.9)
• US ISM N-Mfg Price Paid Idx (Mar) 60.9 (Prev. 62.6)
• US ISM N-Mfg Bus Act (Mar) 55.9 (Prev. 54.4)
• US International Trade (Feb) -122.7B vs. Exp. -123.5B (Prev. -131.4B, Rev. -130.7B)
• US Challenger Layoffs (Mar) 275.24k (Prev. 172.017k)
• US Initial Jobless Claims 219.0k vs. Exp. 225.0k (Prev. 224.0k, Rev. 225k)
• US Continued Jobless Claims 1.903M vs. Exp. 1.87M (Prev. 1.856M, Rev. 1.847M)
• Atlanta Fed GDPNow (Q1 25): -2.8% (prev. -3.7% on 1st April)

FX

• USD slumped after US President Trump's tariff announcement was more aggressive than many had expected which stoked growth concerns with BofA warning that tariffs could push the US economy to "the precipice of recession", while Barclays sees a "high risk" of the US economy falling into a recession this year. There were also a slew of data releases including the large miss on ISM Non-Manufacturing although the data releases took a back seat to the tariff-related turmoil and with participants now awaiting the latest NFP report and comments from Fed Chair Powell on Friday.
• EUR considerably benefitted from the slump in the greenback owing to the tariff announcement, while Services PMI data from the bloc topped forecasts and there were several comments from officials regarding the Trump tariffs including from Spain's PM who asked the European Commission for reinforcement of trade links with the rest of the world and is responding to US tariffs with a EUR 14.1bln plan to protect the Spanish economy.
• GBP traded firmer on the day but is well off intraday highs with a notable pullback in GBP/USD seen after it hit resistance at the 1.3200 level.
• JPY strengthened amid haven flows which dragged USD/JPY briefly beneath the 146.00 handle.

FIXED INCOME

• T-notes rallied after US President Trump's announcement of aggressive tariffs sparked mass risk-off trade.

COMMODITIES

• Oil prices were hit hard throughout the day with energy pressured by Trump's tariffs and a surprise OPEC+ decision to speed up production hikes.
• OPEC+ agreed to make a larger-than-expected supply hike in May.
• EU countries consider changing 2025 gas storage targets, while changes to future EU gas storage targets are being negotiated by EU countries could, if approved quickly enough, also soften this year's binding storage-filling requirements, according to Reuters citing EU diplomats.

GEOPOLITICAL

MIDDLE EAST

• Israeli PM Netanyahu said Israel is committed to dismantling Iran's "axis of terror", according to Sky News Arabia.
• Turkey said Israel's attacks on regional countries have made Israel the biggest threat to regional security, while it added that Israel is a regional destabiliser and is feeding chaos and terror.
• US State Department said President Trump prefers negotiations and diplomatic solutions with Iran and the goal is to stop the Houthi attacks.
• Iran reportedly abandons Houthis under relentless US bombardment and ordered its military personnel to leave Yemen, according to The Telegraph.

RUSSIA-UKRAINE

• Russian President Putin is said to see US President Trump as able to deliver Ukraine concessions and is ready to keep fighting if he doesn't like the Ukraine deal, according to Bloomberg.
• US general said Ukraine is developing some diversification of its weapon supply sources, but is still very dependent on the US.

OTHER

• Chinese and US militaries held a 2025 maritime military security consultation mechanism working group meeting on April 2nd-3rd in Shanghai, according to the Chinese Navy.

ASIA-PAC

NOTABLE HEADLINES

• China's securities regulator held a symposium on deepening comprehensive reforms in capital market financing and investment with private tech enterprises.
• White House is reportedly eyeing TikTok deal announcement for Friday morning, according to FBN's Gasparino citing sources.
• Fitch downgraded China to A from A+; Outlook Stable, while it said "the tariff rise has been much more drastic, and China will still be affected by a broader tariff-induced global slowdown".

EU/UK

NOTABLE HEADLINES

• ECB Minutes stated that amended language should not be interpreted as sending a signal in either direction for the April meeting, with both a cut and a pause on the table, depending on incoming data. The minutes noted it was argued that being prudent in the face of uncertainty did not necessarily equate to being gradual in adjusting the interest rate and it was argued that it was no longer possible to be confident that monetary policy was restrictive. Furthermore, it stated interest rate decisions would continue to be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission.
• ECB's de Guindos said "uncertainty means we need to be extremely prudent when determining the appropriate stance".
• ECB's Stournaras said US tariffs are no obstacle to a rate cut this month and tariffs will hit growth, while the inflation path is unchanged.
• ECB's Kazmir said US tariffs are to a large extent already factored into the ECB's worse-case scenarios and must wait for the EU response.

DATA RECAP

• UK S&P Global Services PMI (Mar) 52.5 vs. Exp. 53.2 (Prev. 53.2)
• UK S&P Global Composite PMI (Mar) 51.5 vs. Exp. 52 (Prev. 52)
• German HCOB Services PMI (Mar) 50.9 vs. Exp. 50.2 (Prev. 50.2)
• German HCOB Composite Final PMI (Mar) 51.3 vs. Exp. 50.9 (Prev. 50.9)
• French HCOB Services PMI (Mar) 47.9 vs. Exp. 46.6 (Prev. 46.6)
• French HCOB Composite PMI (Mar) 48 vs. Exp. 47 (Prev. 47)
• EU HCOB Services Final PMI (Mar) 51.0 vs. Exp. 50.4 (Prev. 50.4)
• EU HCOB Composite Final PMI (Mar) 50.9 vs. Exp. 50.4 (Prev. 50.4)
• EU Producer Prices MM (Feb) 0.2% vs. Exp. 0.1% (Prev. 0.8%, Rev. 0.7%)
• EU Producer Prices YY (Feb) 3.0% vs. Exp. 3.0% (Prev. 1.8%, Rev. 1.7%)