US equity futures are higher into today's CPI print with tech outperforming, as the rout that gripped markets in the past two weeks receded after Trump downplayed the risk of a tariff-led recession. An acceleration of the Trade War is not impacting global Equities. As of 8:00am ET, S&P futures are up 0.9%, at session highs while Nasdaq futures rise 1.1%, with all Mag7 higher pre market (ex-AAPL, same pattern as yesterday). Bond yields are also higher by 1bp as German 10Y rates hit the highest since 2023; the USD is also rising as the euro and yen slide. Commodities are stronger led by Energy and Metals with Ags under pressure. The macro data focus is on CPI where the whisper number appears to be below the BBG consensus (0.3% MoM for core/headline; 3.2%/2.9% YoY for core/headline) but the print is important to shape the market narrative with a hotter print producing stagflation worries while propping up the USD, and a cooler print likely to assuage recent econ concerns.
In premarket trading, Nvidia, Palantir and Tesla were roughly 3% higher with most Mag7 names rebounding (Alphabet +0.9%, Amazon +0.8%, Apple -0.06%, Microsoft +0.6%, Meta +1.2%, Nvidia +2% and Tesla +3.4%). Intel surged 8% after Reuters reported that TSMC has pitched Nvidia, Advanced Micro Devices and Broadcom about taking stakes in a joint venture that would operate the chipmaker’s factories. Here are some other notable premarket movers:
Some investors pointed to sentiment improving after President Donald Trump said he doesn’t see a US economic recession, as well as Ukraine’s decision to accept a US proposal for a 30-day truce with Russia. At the White House late Tuesday, Trump struck a more upbeat note when asked if he was worried about a downturn. “I don’t see it at all. I think this country’s going to boom,” he said. And he played down the markets slump, too. They’re “going to go up and they’re going to go down,” Trump said. “Doesn’t concern me.”
Meanwhile, US tariffs on steel and aluminum imports came into force Wednesday, extending the trade wars to more of the country’s top trading partners. The European Union launched countermeasures, with plans to impose its own duties on up to €26 billion ($28.3 billion) worth of American goods.
Besides the trade war, all eyes are also on the US CPI report, with economists polled by Bloomberg expecting an increase of 0.3% in February, versus the previous month’s 0.5% rise (our full preview is here). While the Federal Reserve is not expected to cut interest rates at next week’s policy meeting, a softer print should reassure investors who have been on edge over the inflation trajectory, particularly in light of brewing trade wars.
“Things are generally looking a little bit better on the inflation front in the United States and if today’s number is benign it will be good to see,” said Guy Miller, chief market strategist at Zurich Insurance Co.
Meanwhile, Goldman Sachs lowered its target for the S&P 500 Index to 6,200 from 6,500, in view of declines in the “Magnificent 7” stocks. That still sees the market rising 11% versus Tuesday’s close. “Our revised estimates reflect the recently reduced GDP growth forecast of our US economics team, a higher assumed tariff rate, and higher level of uncertainty that is typically associated with a greater equity risk premium,” strategists including David Kostin and Jenny Ma wrote in a note dated Tuesday.
In Europe, the Stoxx 600 rises 0.8% and is on course to snap a four-day losing streak, led by construction, chemical and industrial shares. The retail sector was the worst performer, trading at the lowest level since August, dragged down by Zara owner Inditex SA, which reported slowing sales. Ukraine’s decision to accept a US proposal for a 30-day truce with Russia has helped underpin broader risk sentiment, as did upbeat remarks from President Donald Trump on US economic prospects. That offset trade concerns as US tariffs on steel and aluminum came into force, prompting countermeasures from the EU. Here are some of the biggest movers on Wednesday:
Earlier in the session, Asian stocks were mixed after a three-day selloff as investors sought to assess the economic impact of US President Donald Trump’s latest tariff moves. The MSCI Asia Pacific Index was little changed after swinging between a gain of 0.4% and a loss of 0.3%. While key gauges in South Korea, Taiwan and Japan advanced, Australia’s mining-heavy stock benchmark fell as the nation failed to secure an exemption from US steel and aluminum tariffs. Malaysia’s benchmark equity index slumped into a technical correction, partly triggered by foreign investors selling the nation’s stocks. Asia’s equity gauge pared an intraday decline after Trump sought to reassure a business roundtable over the outlook for the US economy and the steps he’s taking to boost growth. His comments followed another selloff in US equities on Tuesday. However, selling pressure resurfaced, with Chinese tech stocks falling near the end of the Hong Kong trading session to drag the MSCI Asia gauge lower.
In FX, the Bloomberg Dollar Spot Index rises 0.2%. The yen underperforms its G-10 peers, falling 0.6% against the greenback after the Trump’s administration hit out at Japan’s elevated rice tariffs, raising concern that the country may be next in line for US levies. EUR/USD fell as much as 0.3% to 1.0888, pulling off the five-month peak touched earlier this week. “I think it’s time for some consolidation in the euro’s rally, which has affected the DXY index significantly,” said Alvin Tan, head of Asia foreign-exchange strategy at RBC in Singapore.
In rates, Treasury futures are down in early US session after small Asia-session gains were erased during London morning. US 10-year yields are higher by 2bps at 4.30%; Bunds lead a selloff in European government bonds, with German 10-year yields rising 3 bps to 2.92% the highest since 2023. Downside pressure stems from bund selloff following European Union’s countermeasures against US metals tariffs. Germany’s 10-year yield is getting closer to the 3% milestone as investors brace for a historic surge in spending and borrowing. Focal points of US session focus include February CPI data and 10-year note reopening. This week’s Treasury auction cycle continues with $39 billion 10-year at 1pm New York time and concludes Thursday with $22b 30-year reopening; demand was soft for Tuesday’s 3-year new-issue auction, which tailed by 0.6bp
In commodities, oil prices advance, with WTI rising over 1% to $67 a barrel. Spot gold is steady near $2,915/oz. Bitcoin falls 0.6% to around $82,200.
Today's economic data calendar includes MBA Mortgage Applications (up 11.2%, vs 20.4% last month). February CPI (8:30am) and Federal budget balance (2pm). Fed officials are in external communications blackout ahead of March 19 policy announcement
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APAC stocks traded mixed following the choppy performance stateside where the focus was centred on tariff rhetoric and Ukraine ceasefire talks, while the US's 25% tariffs on steel and aluminium took effect overnight. ASX 200 underperformed with firm losses in consumer discretionary, industrials and financials, while risk sentiment was also pressured after Australia failed in its efforts to get an exemption from looming tariffs. Nikkei 225 remained afloat but with price action choppy after mixed PPI and BSI Manufacturing data. Hang Seng and Shanghai Comp were ultimately mixed with the mood indecisive in both the mainland and Hong Kong amid light fresh catalysts although China’s securities regulator recently pledged to consolidate the momentum of market stabilisation.
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European bourses (STOXX 600 +0.8%) are stronger today, and sentiment in the complex improves following the hefty downside seen on Tuesday and as the region reacts to Ukraine ceasefire optimism. European sectors hold a strong positive bias; Construction & Materials tops the pile, whilst Retail is the clear laggard. The latter is pressured by post-earning losses in Inditex (-8.2%, slow start to Q1) and Puma (-24%, very weak 2025 outlook). In terms of key movers today; Zealand Pharma (+25%) opened higher by 45% after it secured a deal with Roche (+3%) to collaborate on obesity drugs; Novo Nordisk (-5%).
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DB's Jim Reid concludes the overnight wrap
Markets experienced another volatile session yesterday, as President Trump threatened a further escalation in the trade war against Canada. At the lows of the day, it even saw the S&P 500 (-0.76%) briefly fall into technical correction territory, on track to close just over 10% beneath its February peak. However, there was a late risk-on move towards the end of the session, as a retreat from some of the more aggressive tariffs and positive headlines on Ukraine helped markets to recover, with the S&P 500 ultimately avoiding a correction and “only” closing -9.31% beneath its peak. But even with that, the latest declines still meant the S&P 500 hit a 6-month low, which is the first time we’ve been able to say that since October 2022.
The risk-off tone emerged after Trump said that the US would put an additional 25% tariff on Canadian steel and aluminium, pushing the rate up to 50%, in response to Ontario putting a 25% tariff on electricity coming into the US. He also made various other statements against Canada, saying that if other tariffs weren’t dropped, “I will substantially increase, on April 2nd, the Tariffs on Cars coming into the U.S. which will, essentially, permanently shut down the automobile manufacturing business in Canada.” Then later in the session, Ontario's premier Doug Ford announced that the province would suspend the 25% electricity export tariff, with Trump in turn paring back the planned tariffs on Canadian steel and aluminium back to 25%. Overnight, those 25% US steel and aluminium tariffs have come into effect, which apply worldwide, with no exemptions granted. And the EU have also proposed countermeasures overnight covering €26bn of American goods, which would come into force over April.
Sentiment also got a boost yesterday thanks to constructive headlines out of talks between US and Ukrainian officials in Saudi Arabia. In particular, Ukraine said it was ready to accept a US proposal for a 30-day ceasefire, with the US administration in turn lifting the pause on military aid and intelligence it had announced early last week. US officials now plan to present the plan to Moscow, with Trump saying that "Hopefully President Putin will agree to that also".
With the latest developments, equity futures are now pointing to a recovery overnight, with those on the S&P 500 up +0.27%, whilst DAX futures are up +1.01%. The VIX index of volatility (-0.94pts) also moved off of its 7-month high on Monday, coming down to 26.92pts. But otherwise, it still wasn’t a great day yesterday, and the decline for stocks was a broad-based one, with the equal-weighted S&P 500 down -1.35%. Meanwhile in credit markets, US HY spreads (+6bps) moved up to 316bps, their highest since September, as did IG spreads (+3bps) with an increase to 94bps. Moreover, the selloff turned increasingly global as well, with Europe’s STOXX 600 (-1.70%) posting a 4th consecutive decline for the first time this year. European equities have been outperforming over 2025 so far, but the latest decline left the STOXX 600 -4.66% beneath its record high just over a week ago.
Looking forward, the next test for markets will be the US CPI inflation print for February, which is out at 12:30 London time. This will be an important one ahead of the Fed’s decision next Wednesday, as another strong print would make it more difficult for them to cut rates this year, particularly given the potential inflationary impact of tariffs in the coming months. In terms of what to expect, our US economists are looking for headline CPI to moderate to a monthly +0.27% pace, down from the +0.47% print in January, which was the fastest in over a year. In turn, that would push the year-on-year rate down a tenth to +2.9%. Then for core CPI, they also see that moderating to +0.26%, with the year-on-year rate falling to +3.1%.
Ahead of the CPI print, US Treasuries sold off yesterday, as a strong JOLTS report outweighed the impact of the tariffs. The release showed that the US labour market was in better shape than thought in January, with job openings up to 7.740m (vs. 7.6m expected). In addition, the quits rate of those voluntarily leaving their jobs was up to a 6-month high of 2.1%, again suggesting that workers remained confident in their prospects. By the close, yields on 10yr Treasuries were up +6.6bps to 4.28%, and the 2yr yield was up +6.0bps to 3.945%, with the selloff intensifying later in the US session. And despite the move higher in yields, the US dollar underperformed, with the dollar index falling -0.46% to its lowest since October. However, Treasuries have rallied a bit overnight, with the 10yr yield (-1.3bps) down to 4.27% this morning.
Meanwhile in Europe, bond yields hit fresh highs as the newsflow suggested that the German Greens could still reach a deal on defence spending that would pave the way for more borrowing. The Green party’s co-leader Franziska Brantner said that “of course we are ready to negotiate”. So with investors viewing a deal as possible still, that meant 10yr bund yields moved up +6.2bps on the day to 2.89%, their highest level since October 2023. Indeed, the latest move leaves them just short of their 2.97% peak that month, which itself was the highest since 2011, before yields moved sharply lower as the Euro crisis escalated. Meanwhile in France, the 10yr yield (+4.2bps) did hit a post-2011 high of 3.58%. But despite the broader risk-off move, sovereign bond spreads tightened further, with the Franco-German 10yr spread reaching just 69bps, which is their tightest level since July.
In US political news overnight, the House passed a funding bill that would keep the US government funded through to September 30 and avoid Saturday's shutdown deadline, with all but one of the Republican Representatives supporting the legislation in a 217-213 vote. The next question is if the bill can achieve sufficient Democrat support to reach the necessary 60 votes in the Senate.
Overnight in Asia, equity markets have broadly put in a steady performance, with gains for the Nikkei (+0.32%), the Shanghai Comp (+0.15%), the CSI 300 (+0.03%) and the KOSPI (+1.41%). However, the Hang Seng is down -0.35% this morning, while Australia’s S&P/ASX 200 has seen a sharper -1.32% loss after it was confirmed that Australia would not get an exemption from US steel and aluminium tariffs.
Looking at yesterday’s other data, the NFIB’s small business optimism index was broadly as expected at 100.7 (vs. 101.0 expected). However, there were fresh signs of inflationary pressures, as the share of firms raising average selling prices moved up to a net +32%, the highest since May 2023.
To the day ahead now, and the main data highlight will be the US CPI print for February. From central banks, the Bank of Canada will announce their latest policy decision, and speakers will include ECB President Lagarde, as well as the ECB’s Simkus, Villeroy, Escriva, Centeno, Nagel, Lane and Panetta.