US equity futures and global stocks rose as the threat of a US government shutdown receded, removing at least one element of uncertainty confronting investors. Meanwhile, gold hit a record above $3,000 an ounce as the precious metal already anticipates the stimulus flood that is coming over the horizon.As of 8:00am S&P futures are higher by 0.9% as a stopgap funding bill is set to pass in Congress after top Senate Democrat Chuck Schumer caved and opted not to block the measure. That helped lift the mood after the benchmark index extended its three-week rout beyond a 10% correction on Thursday. Nasdaq 100 futures advanced 1.2% with Nvidia leading premarket gains among the Mag7. In Europe, the Stoxx 50 advances 1.3% with outperforming sectors including consumer staples and materials; Asian stocks were also higher. Bond yields are 1-3bp higher this morning; the USD fell as the EUR surged after politicians agreed to a deal to drown Germany in debt to fund "military spending." Commodities are higher led by Oil (WTO +1.0%) and Iron (+1.5%). Since yesterday’s close, there has been some positive developments on macro policies: meeting between Lutnick and Ontario’s Ford was viewed as positive; the US government managed to avoid the shutdown. Internationally, China will hold a press briefing next Monday to outline some additional measures boost consumer; Japan announced the largest pay hike in over three decades (+5.36% average pay gain and +3.84% base pay vs. 3.8% JPMe vs. 3.7% last year), a positive catalyst for consumption growth, yet not enough to push the yen higher. Today's calendar includes March preliminary University of Michigan sentiment at 10am where consensus expects a 63.0 print.
In premarket trading, Nvidia is leading gains among the Magnificent Seven stocks as the group attempts to stage a rebound after the S&P 500 tumbled into its first 10% correction in almost two years. Alphabet +0.9%, Amazon +1.2%, Apple +0.5, Microsoft +0.7%, Meta +1.5%, Nvidia +2% and Tesla +1.7%. Applied Optoelectronics surges 55% after the maker of fiber-optic networking products entered a warrant agreement with Amazon. Ulta Beauty jumped 6% after reporting earnings per share for the fourth quarter that beat the average analyst estimate. Here are some other notable premarket movers:
Spot gold briefly rose above $3,000/oz for the first time while broader risk sentiment improved after Senate Democratic leader Chuck Schumer dropped his threat to block a Republican spending bill, thus lowering the chances of a US government shutdown on Saturday.
“It looks like the budget bill is still going through despite some opposition from Democrats and this has lifted sentiment in the US and probably there is also some spillover effect to Europe,” Julius Baer & Co. economist Sophie Altermatt said. “This might be just some reprieve, given we had so many uncertainties with erratic policy moves in the US,” she added.
Avoiding a government shutdown would remove a concern for traders, already fretting over threats to the world economy from President Donald Trump’s tariff war. Two months into Trump’s presidency, $5 trillion has been erased from US stocks. Those risks are spurring demand for haven assets, with investors the most bullish on Treasuries relative to stocks for at least three years, according to Bloomberg Markets Live Pulse survey. It’s also pushed gold to successive record highs, with the yellow metal now up more than 14% year-to-date.
“Gold is in a secular bull market,” said Peter Kinsella, head of foreign exchange strategy at Union Bancaire Privee UBp SA, who expects prices to reach $3,300 an ounce by year end. “For sure, that’s down to uncertainty caused by US trade policies but central bank demand is also a big factor.”
Some strategists reckon relief could be on the horizon for risk assets after the recent selloff. While the S&P 500 has plunged 10% off its February peak into correction territory, Bank of America’s Michael Hartnett said there’s unlikely to be a slide into a new bear market: “Fresh declines in stock prices will provoke flip in trade and monetary policy,” Hartnett wrote in a note, recommending buying the S&P 500 at 5,300 points, a 4% drop from current levels.
In Europe, German conservative leader Friedrich Merz reached a tentative agreement with the Green party on a debt-funded spending package for defense and infrastructure. The deal needs to be approved by party lawmakers and would release defense spending from debt restrictions and set up a €500 billion fund for infrastructure investment.
The Stoxx 600 climbs 0.4% as miners gained on expectations of economic support measures from China, even as benchmark indexes headed for a second straight week of declines. Carlsberg jumps on an upgrade from RBC, while Kering sinks after appointing a new artistic director to its key Gucci brand. Here are the biggest movers Friday:
Earlier in the session, Asian equities also advanced, propelled by a rally in Chinese shares as investor optimism for more policy support rose ahead of a press briefing on government efforts to boost consumption. The MSCI Asia Pacific Index rose as much as 0.9%, with Tencent and Alibaba among the biggest boosts. China’s onshore CSI 300 Index and Hong Kong’s Hang Seng China Enterprises Index each jumped more than 2%. China optimism rose on the announcement that officials from the finance ministry, commerce ministry, central bank and other government bodies are scheduled to hold a briefing on consumption Monday. The news provided traders further assurance that Beijing is determined to fix one of the weakest links in the economy. Word of the press conference “fanned expectations” for policy support, said Shen Meng, a director at Beijing-based investment bank Chanson & Co. “But if it falls short of providing details on increasing income, such optimism may weaken to some extent.” Stocks in Japan and Australia also rose, and US futures rebounded following the S&P 500’s drop into a technical correction Thursday. Rising prospects for a stopgap funding bill to avoid a US government shutdown provided some reassurance for markets amid continued concerns over economic growth and tariffs.
In FX, the Bloomberg Dollar Spot Index drops; The Japanese yen is the weakest of the G-10 currencies, falling 0.7% against the dollar even as Japan’s largest labor union group said its workers secured the highest pay deal in more than three decades. The pound falls 0.2%, extending its drop after data showed the UK economy unexpectedly shrank at the start of 2025. The Euro jumped above 1.09 after German conservative leader Friedrich Merz reached a tentative agreement with the Green party on a debt-funded spending package for defense and infrastructure. The deal needs to be approved by party lawmakers and would release defense spending from debt restrictions and set up a €500 billion fund for infrastructure investment.
In rates, treasury futures trend lower into the early US session. Treasury yields are cheaper by 1bp to 3bp across the curve with 10-year trading around 4.18%, cheaper by 3bp on the day with bunds lagging by 4bp in the sector and 10-year French bonds lagging 2bp. Bunds slid to lows of the day and French 30-year yields rose to the highest since 2011, after a report that German parties have reached an agreement with the Greens on a debt package. Advance in US stock futures adds to cheapening pressure on Treasury yields with University of Michigan sentiment data the focus for the US session.
In commodities, WTI rises 1% to ~$67 a barrel. The upbeat mood is evident elsewhere as Bitcoin climbs rises 3% toward $83,000. Gold traded briefly at a record price just above $3000 before modestly fading gains.
Looking at today's calendar, the US economic data calendar includes March preliminary University of Michigan sentiment at 10am. Fed officials are in external communications blackout ahead of March 19 policy announcement.
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A more detailed look at global markets courtesy of Newsquawk
APAC stocks were mostly positive as risk sentiment gradually improved following the negative lead from Wall St where the S&P 500 slipped into a technical correction amid tariff concerns after President Trump threatened 200% tariffs on EU wine and champagne. ASX 200 gained as strength in mining, materials, resources and utilities atoned for the losses seen in the energy, financials and tech industries. Nikkei 225 staggered at the open with pressure from recent currency strength but then recovered soon after as the yen steadily pared its recent gains. Hang Seng and Shanghai Comp advanced with the Hang Seng resuming the outperformance which has helped the index notch gains of around 22% so far this year, while the PBoC reiterated support pledges and stated that it will lower rates and the RRR at a 'proper time', keep liquidity ample and guide social financing costs lower.
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European bourses are mostly firmer, in what has been a choppy session thus far; initial weakness at the cash open has been entirely pared with indices generally towards the top end of the day's ranges. European sectors hold a slight positive bias; Basis Resources tops the pile, buoyed by strength in the metals complex, amid the risk sentiment and strong Chinese price action overnight. Media is found at the foot of the pile. Consumer Products is also higher today, benefiting from the strength in Chinese trade overnight; though Kering (-13%) slips after appointing Demna as Gucci's artistic director, a move JP Morgan brands as "controversial".
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DB's Jim Reid concludes the overnight wrap
After my promise of an exciting special announcement, yesterday we announced the launch of the Deutsche Bank Research Institute (DBRI), a new offering designed to provide valuable insights for corporates, investors and policymakers navigating today’s complex and rapidly evolving global landscape. The Institute will connect the world to Europe and Europe to the world, across geopolitics, macroeconomics, technology, and the evolving corporate landscape. Going forward, we will be delivering more in-depth analysis through engaging and accessible formats, including videos, podcasts, webinars, events and reports, which will be available on our new public Institute website.
The inaugural paper for DBRI is called “What Germany’s economy needs now”, which lays out how the country’s economic prosperity has been under severe pressure from geopolitical and technological changes, which have exposed Germany’s structural weaknesses. It outlines a series of necessary reforms which will demand a historic effort from the next government. The challenges beyond the fiscal injections are enormous but the good news is that Germany has its future prosperity and security in its own hands. You can read the English version here and the German version here. Stand by for more papers over the coming weeks and months from our new Deutsche Bank Research Institute.
The market sell-off resumed in earnest yesterday, with the S&P 500 (-1.39%) down to another 6-month low and into technical correction territory, with the index down -10.13% from its peak as recently as February 19. This is the first correction since October 2023, and Bloomberg reported that this was the seventh-fastest correction in data back to 1929, taking just 16 sessions for it to happen. Other asset classes also continued to struggle, with US HY spreads (+22bps) reaching their widest level since August, at 335bps. And as investors poured into perceived safe havens, gold prices (+1.85%) hit a record high of $2,989.
Once again, the main driver was a fresh volley of tariff threats from President Trump, who made several posts criticising the EU yesterday. In terms of the latest, President Trump said that if the EU continued with its 50% tariff on American whisky, then the US would respond with a 200% tariff on EU wines, champagnes and alcoholic products. That immediately caused issues for several European beverage companies, with Pernod Ricard (-3.97%) posting the worst performance in France’s CAC 40 yesterday, and Remy Cointreau (which produces cognac) fell -4.67%. More broadly though, President Trump’s comments reignited fears that the EU could soon face a much more serious trade escalation, particularly with reciprocal tariffs set for April 2. Indeed, earlier in his post on the 200% tariff, he described the EU as “one of the most hostile and abusive taxing and tariffing authorities in the World, which was formed for the sole purpose of taking advantage of the United States”. Bear in mind that President Trump has said he considers VAT to be like a tariff, so that could cause considerable issues for EU member states.
Matters weren’t helped yesterday by the potential threat of a US government shutdown, with funding set to run out at midnight tonight. However, after the US close, the Democratic Senate Minority Leader Chuck Schumer said that he would vote to advance the Republican bill rather than see a shutdown. So that’s helped futures to recover a decent amount of ground this morning, with those on the S&P 500 up +0.76%. The Republicans do have a majority in both chambers of Congress, but in the Senate they only have a 53-47 margin, and require 60 votes to prevent a filibuster happening, so they had to get at least some Democratic support to pass their funding bill.
Nevertheless, that news came too late to prevent US markets taking a fresh hit yesterday, with the S&P 500 (-1.39%) now down -10.13% from its record high, and surpassing the 10% threshold that makes it a technical correction. Moreover, the decline for this week alone now stands at -4.31%, which if realised would be the worst weekly performance since the week of SVB’s collapse two years ago. As in recent days, the Magnificent 7 (-2.49%) led the declines, moving back into bear market territory having shed -20.25% since its December peak. And even though tech led the losses, it was still a broad-based decline, with the equal weighted S&P 500 (-1.00%) struggling as 78% of its constituents lost ground on the day.
Whilst investors were concerned about tariffs and the latest shutdown threat, there was little respite from the latest PPI inflation data either. To be fair, it was softer than expected, with monthly headline PPI flat (vs. +0.3% expected), taking the year-on-year rate down to +3.2% (vs. +3.3% expected). But the problem was that the components that feed into PCE inflation (the Fed’s target measure) were relatively stronger, which added to concern that the Fed would struggle to meaningfully cut rates this year. The 10y Treasury yield traded as much as +3.8bps higher on the day following the release, but the bond sell-off turned into a rally as risk sentiment soured, with 10yr yields down -4.3bps to 4.27% by the close. At the front end, 2yr yields were -3.1bps lower to 3.96%.
Over in Europe, there were fresh developments over Ukraine as discussions around a ceasefire continued. Russian President Putin said on the ceasefire proposal that “The idea itself is correct and we certainly support it, but there are issues that we need to discuss”, in particular mentioning that Ukraine could use the ceasefire to mobilise and re-arm. So that fit with expectations that Russia would softly push back against the idea of a ceasefire without preconditions. Later on, Ukrainian President Zelenskiy criticised President Putin's comments as "very manipulative". President Putin was also due to meet US envoy Steve Witkoff last night but we have not yet heard any comments from that meeting.
Elsewhere in Europe, the other big story for markets has been the start of the debate in the German Bundestag on changing the constitutional debt brake. The debate is being conducted with the old pre-election Bundestag, where the combination of the CDU/CSU, the SPD and the Greens still have a two-thirds majority. It still isn’t clear whether the Greens will offer support to the proposals, although talks are still ongoing. Nevertheless, the debate did include frustration between Merz and the Greens, with Merz saying “What more do you want than what we have proposed to you?”
Meanwhile, Katharina Dröge, co-leader of the Green caucus in the Bundestag, said that “If you now wonder why the talks between us and you are going the way they are, then we can tell you: Because we don’t trust in your word”.
With all that going on, European assets echoed the global risk-off move yesterday. That saw the STOXX 600 (-0.15%) post a modest decline, although there were bigger losses for France’s CAC 40 (-0.64%) and the German DAX (-0.48%). In the meantime, the move into perceived safe havens meant German bunds outperformed their counterparts, with 10yr yields down -2.3bps, in contrast to those on 10yr OATs (+0.5bps) and BTPs (+1.3bps) which rose slightly.
Overnight in Asia, markets are performing well as it looked like the US would avoid a government shutdown. Moreover, Chinese markets got a fresh boost after it was announced that several government bodies would host a press conference on Monday about boosting consumption. So those developments helped support the major indices across the region, with gains for the Nikkei (+0.89%), the Hang Seng (+1.89%), the CSI 300 (+2.24%) and the Shanghai Comp (+1.56%). The main exception to that has been South Korea’s KOSPI, which has fallen -0.28%. Meanwhile in Japan, the country’s 30yr government bond yield (+3.0bps) moved up to its highest level since 208, at 2.61%.
Lastly, there wasn’t much other data yesterday, although the US weekly initial jobless claims were better than expected over the week ending March 8, falling to 220k (vs. 225k expected). Moreover, the continuing claims for the week ending March 1 fell to 1.870m (vs. 1.888m expected).
To the day ahead, and US data releases include the University of Michigan’s preliminary consumer sentiment index for March, along with UK GDP for January. Central bank speakers include the ECB’s Escriva and Cipollone.