Futures Slide As Recession Fears Mount, Trump Warns Of Looming "Disruption"
US equity futures continue their relentless grind lower, as they trade just off session lows, down more than 1% as the "Trump Dump" selloff continues amid growing concerns about the health of the US economy. As JPM notes this morning "today there is a global de-risking but let’s see if Int’l Eqys outperform on the move lower or if the US can see a relief rally"; so far the answer is a resounding no with both European and Asian stocks tumbling, after Trump declined to rule out a recession due to his policies, pointing to a transition period for the economy. As of 8:00am, S&P futures are down 1.2% to 5,705 following the worst week for the benchmark index since September, while Nasdaq 100 futures slide 1.1% with all Mag7 stocks sharply lower to start the week: Tesla shares fell about 3% in premarket trading inching toward erasing their post-election gains, and most other Big Tech names also dropped, including AI bellwether Nvidia. European stocks slipped 0.4%. Treasuries are down 4-6bps amid rising recession fears, while the USD continues its post-Trump slump. In commodities, Ags and Energy are higher green while precious and base metals slide after China’s recent data confirmed deflation has returned to the second largest economy. Today’s macro data focus is on NY Fed’s 1-Year Inflation Expectations.
In premarket trading, Tesla leads losses among the Magnificent Seven stocks as the broader market selloff intensifies amid concerns of slowing economic growth (GOOGL -1%, AMZN -1.2%, AAPL -1.4%, MSFT -1%, META -1.4%, NVDA -1.8% and TSLA -2.6%). Cryptocurrency-exposed stocks fall as Bitcoin extends losses for a fifth consecutive session after President Donald Trump’s long-awaited order to create a strategic Bitcoin reserve disappointed the market and weighed on digital currencies (MicroStrategy (MSTR) -5%, Riot Platforms (RIOT) -4%). Here are some other notable premarket movers:
- Beam Therapeutics (BEAM) rises 12% after the drug developer gave initial data from an early trial of its investigative therapy for a genetic disease that can cause lung and liver damage.
- Checkpoint Therapeutics (CKPT) soars 67% after the immunotherapy and targeted oncology company agreed to be acquired by Sun Pharmaceutical Industries.
- Coinbase (COIN) drops 6% after the cryptocurrency exchange operator was left out of a reshuffling of the S&P 500 Index on Friday.
- DoorDash (DASH) climbs 3% as the S&P Dow Jones Indices is adding the the food-delivery company to the S&P 500 index.
- Other S&P 500 inductees gain: Williams-Sonoma (WSM) +0.8%, Expand Energy (EXE) +2%
- Intuitive Machines (LUNR) slumps 8%, extending last week’s selloff after it ended a lunar mission early following a flawed landing, the second setback for the company following a similar problem last year.
- Mineralys (MLYS) soars 45% after the drug developer said two trials of its experimental hypertension medicine, lorundrostat, met their main goals.
- Redfin Corp. (RDFN) soars 85% after Rocket Cos. agreed to buy the company in a deal that values the real estate listing site at $1.75 billion. Rocket (RKT) slips 9%.
- Robinhood (HOOD) falls 5% after agreeing to pay $26 million to settle allegations by the Financial Industry Regulatory Authority that it failed to respond to red flags about potential misconduct and didn’t verify the identities of thousands of customers.
- Samsara (IOT) gains 2% after Piper Sandler and BMO upgraded the software company to buy-equivalent ratings in the wake of a stock selloff driven by a lackluster fourth-quarter earnings report.
Mounting unease over the potential fallout from trade tariffs and sweeping government job cuts sent 10-year Treasury yields five basis points lower. The key borrowing rate has dropped more than 20 basis points in the past month, signaling risks that the world’s biggest economy will stall. Bloomberg’s dollar index held just shy of four-month lows. Tariffs and Trump’s policies have started having their “fair share of pressures on the equity markets, plus we have now started seeing a lot of concerns around US growth,” Sanford C. Bernstein strategist Rupal Agarwal said on Bloomberg TV.
Trump said at the weekend the US economy faces “a period of transition,” and there could be disruption in the near-term, suggesting that stocks could extend their slide in the near-term. “There could be a little disruption. You can't really watch the stock market. If you look at China, they have a 100-year perspective… we go by quarters. What we’re doing is building a foundation for the future” Trump told Maria Bartiromo on Sunday. At the same time, Treasury Secretary Scott Bessent earlier warned of disruption to growth. Bessent also ruled out policy shifts to prop up the stock market, the so-called “Trump Put.”
Meanwhile, more analysts are warning of a hit to corporate earnings from tariffs and fiscal spending cuts. Morgan Stanley strategist Michael Wilson said the S&P 500 could slide 5% in the first half of the year, though he expects a recovery by year-end. JPMorgan analysts also said they are turning cautious on risk assets.
A higher open for European stocks didn’t last for long as shares quickly turned negative and the Stoxx 600 is now down 0.6%, with banks, construction and technology shares underperforming. Verallia, Ryanair and energy stocks were among the biggest outperformers, while Traton, Norma and Air France-KLM fall. Here are the biggest movers Monday:
- Verallia shares rise as much as 4.5% after Brazil’s billionaire Moreira Salles family said it will make a voluntary tender offer for shares it doesn’t already own in the French glass-bottle maker
- Ryanair shares jump as much as 6.7%, the most since November 2023, after the airline group said non-EU nationals are allowed to purchase ordinary shares
- European energy stocks outperform Monday after US natural gas futures advanced to the highest level since 2022 on signs the nation could face storage levels below the five-year average this summer
- Watches of Switzerland rises as much as 7.8%, rebounding after ending last week at its lowest level since November, as the luxury watch retailer said it has started a £25 million share buyback
- Assura shares rise as much as 14% to 46.64p after a group comprising KKR and Stonepeak Partners made an indicative, non-binding cash proposal of 49.4p per share for the UK health-care landlord
- Traton shares drop as much as 7.9% after the German truckmaker’s margin guidance for 2025 missed expectations and after the company said it is too early to declare a European turnaround
- Norma shares drop as much as 7%, to the lowest since December, after analysts said the component maker’s guidance, released on Friday, was well below expectations
- Air France-KLM shares slip as much as 3.1% after Bernstein cuts its rating on the airline group to market-perform. Analysts note that the carrier’s unit costs are set to keep rising in 2025
- Clarkson shares slide as much as 20%, their worst one-day loss in seven months, after the shipbroker gave a cautious outlook for 2025 citing uncertainty due to regional conflicts and trade tensions
Earlier, Asian equities fell, led by declines in Hong Kong, as consumer inflation fell below zero for the first time in 13 months, compounding the dour outlook for the world’s second-biggest economy. The MSCI AC Asia Pacific Index fell as much as 0.9%, extending Friday’s losses, which pared the gauge’s best week since September. Tencent, Alibaba and Meituan were among the biggest drags Monday. Hong Kong-listed Chinese stocks dropped more than 2%, while shares gained in South Korea and Australia. China’s consumer inflation dropped below zero for the first time in 13 months and missed expectations. While the data were skewed by an earlier-than-usual Lunar New Year holiday, the reading unsettled the market after last week’s optimism over Beijing’s efforts to support domestic consumption.
“The market is still concerned over the dis-inflation pressure of China, which may be one of the excuses for equity indexes to see near-term corrections,” said Jason Chan, a senior investment strategist at Bank of East Asia. “In the medium run, I think inflation data will improve amid fiscal stimulus and recovery in the property market.”
The risk-averse mood can be seen elsewhere as havens outperform. In FX, the Bloomberg Dollar Spot Index hovered near to a four-month low, while Treasury yields slipped 5-7bps across the curve, as concerns around the US growth outlook mounted. Noway’s krone led Group-of-10 gains climbing over 1% against the dollar; Norwegian inflation accelerated more than expected last month, throwing in doubt Norges Bank’s long-awaited first interest-rate cut
USD/JPY fell as much as 0.7% to 146.99, after Japanese workers saw their base pay rise at the fastest clip in 32 years
USD/CAD steadied around 1.4375, after Mark Carney won the race to become Canada’s next prime minister
In rates, Treasuries lead gains in the bond market, with US 10-year yields dropping ~8 bps to 4.23% as spreading concern about a US growth slowdown fuels a flight-to-quality bid, weighing on equity index futures. A heavy corporate bond slate has been predicted for this week, with as many as 15 offerings viewed as possible for Monday. This week’s Treasury supply kicks off Tuesday and includes 3-, 10- and 30-year notes and bonds. US yields are 5bp-7bp richer across maturities led by intermediates, steepening 5s30s curve by around 2bp; 10-year near 4.24%, richer by 6bp, outperforms bunds and gilts in the sector by 3bp and 5bp. In Japan, 40Y JGB yields rose to the highest on record.
In commodities, oil prices edge higher, with WTI rising 0.3% to $67.20 a barrel. Spot gold falls $5 to around $2,905/oz. Bitcoin falls 1% to near $82,000, having pared an earlier drop to near $80,000.
Looking at today's calendar, US economic data calendar includes February New York Fed 1-year inflations expectations at 11am New York time. Ahead this week are JOLTS job openings, CPI, PPI and University of Michigan sentiment. Fed officials are inn external communications blackout ahead of March 19 policy announcement.
Market Snapshot
- S&P 500 futures down 0.9% to 5,724.50
- STOXX Europe 600 little changed at 552.92
- MXAP down 0.7% to 186.71
- MXAPJ down 0.9% to 585.22
- Nikkei up 0.4% to 37,028.27
- Topix down 0.3% to 2,700.76
- Hang Seng Index down 1.8% to 23,783.49
- Shanghai Composite down 0.2% to 3,366.16
- Sensex little changed at 74,387.84
- Australia S&P/ASX 200 up 0.2% to 7,962.30
- Kospi up 0.3% to 2,570.39
- German 10Y yield down 2.7 bps at 2.82%
- Euro down 0.1% to $1.0821
- Brent Futures little changed at $70.34/bbl
- Gold spot down 0.2% to $2,902.71
- US Dollar Index little changed at 103.92
Top Overnight News
- Ahead of the Friday deadline for a funding bill to pass to avoid a US shutdown, "It doesn’t feel like a shutdown is going to happen, although there’s still a chance because, well, this is Congress" – Punchbowl
- House Republicans announced a spending bill to avert a government shutdown, daring Democrats to vote against it. Trump called on Republicans to pass the bill, warning them to allow “no dissent” in their ranks. BBG
- Fed’s Daly (2027 voter) suggested that economic research shows uncertainty is a source of demand restraint and noted there are plenty of signs that the economy is solid but the market is giving mixed signals which is the reason monetary policy should be careful and deliberate, while she added that the Fed has rates in a good place.
- Trump said he will pick the Federal Reserve Vice Chairman for Bank Supervision fairly soon It was also reported that Trump declined to predict whether the US could face a recession amid stock market concerns about his tariff actions on Mexico, Canada and China over fentanyl, while he said tariffs on Mexico and Canada could go up, according to Reuters citing an interview with Fox News.
- Mark Carney will lead Canada’s Liberal Party and become the country’s next PM as Donald Trump’s trade policies fuel uncertainty. The former central bank chief vowed to maintain retaliatory tariffs until “Americans show us respect” and to make the nation an energy superpower. BBG
- AAPL (Apple) suffered another AI setback when the company confirmed it wouldn’t be releasing an enhanced version of Siri for the foreseeable future. BBG
- A new ceasefire deal between Israel and Hamas is possible within weeks, a US envoy told CNN. Israel halted its supply of electricity to Gaza. BBG
- China’s CPI turned negative for the first time in 13 months, falling 0.7% in February from a year earlier. The core measure, which also slid, highlights the need for policymakers to deliver stimulus quickly. BBG
- China has introduced retaliatory tariffs on about $22bn of US goods, including agricultural exports, targeting President Donald Trump’s rural base in the latest escalation in the trade war between the world’s two largest economies. Beijing’s measures, which were announced last week in response to Trump slapping an additional 10% levy on all Chinese products, are aimed primarily at US farm goods. FT
- Japan's real wages fell in January after two months of slight gains, data showed on Monday, days before the annual rounds of pay negotiations held each spring culminate at the country's major firms. Japan real cash earnings for Jan come in a bit below expectations at -1.8% (vs. the Street -1.6%). RTRS
- German industrial production comes in a bit better than anticipated in Jan (+2% M/M vs. the Street +1.5%) while exports fall short (-2.5% vs. the Street +0.5%). RTRS
- Ukraine will try to convince Washington to resume arms/intelligence assistance during negotiations this Tues in Saudi Arabia, w/Kyiv advocating for a partial ceasefire in the war with Russia. FT
Trade/Tariffs
- US Commerce Secretary Lutnick said President Trump will not ease up on fentanyl-related tariffs and that tariffs will come off if fentanyl ends, while he noted steel and aluminium tariffs take effect on Wednesday and they will revisit fentanyl and reciprocal trade issues on April 2nd.
- Incoming Canadian PM Carney vowed to discover new trade partners and ensure borders, while they will keep tariffs on the US until Americans show them respect. Carney said they cannot let Trump succeed and will ensure that all proceeds from tariffs will be used to protect their workers.
- Canadian Finance Minister LeBlanc said Canada is ready for an immediate review of the USMCA trade agreement and there is still room for talks on steel and aluminium tariffs.
- China’s MOFCOM said it will impose tariffs on some imports from Canada in retaliation for Canadian tariffs on Chinese goods effective March 20th in which it will impose 100% tariffs on Canadian rapeseed oil imports and 25% on port and seafood imports, while it will impose additional tariffs on some other Canadian goods.
- South Korean Acting President Choi ordered to communicate actively with the US about tariff rates and will consult with the US about cooperation in shipbuilding and energy sectors, while they are to review non-tariff measures related to US reciprocal tariffs.
A more detailed look at global markets courtesy of Newsquawk
APAC stocks began the week mixed amid tariff-related concerns and as participants digested the softer-than-expected Chinese inflation data from over the weekend. ASX 200 eked mild gains with outperformance seen in energy, resources and materials but with the upside capped by weakness in defensives and the economic concerns related to Australia's largest trading partner. Nikkei 225 gradually shrugged off the initial indecisiveness and clawed back early losses to reclaim the 37,000 status as participants digested data releases including the slower-than-forecast growth in Labour Cash Earnings. Hang Seng and Shanghai Comp retreated amid deflationary headwinds after CPI data slipped into negative territory for the first time in over a year, while tariff concerns lingered as China's retaliatory tariffs against the US's March 4th additional tariffs took effect today.
Top Asian News
- Deputy to China's National People's Congress (NPC) says China's "around 5%" GDP target for 2025 is certainly challenging and by no means an easy feat, via Global Times. Tian said one of China's biggest challenges is insufficient domestic demand but believes the government's plans, such as increasing the budget deficit to support higher government spending, issuing ultra-long special treasury bonds, and improving investment efficiency will help address the issues.
- China’s Housing Minister said market confidence has been enhanced and the property market shows positive changes, while they will step up lending for ‘White list’ property projects and promote the purchase of existing housing stocks. China will give more autonomy to local governments in purchasing housing stocks for affordable housing and part of China’s local government special bonds will be used for purchasing land and housing stocks.
- China’s Human Resources Minister said they face an arduous task to stabilise and expand employment in 2025 and the external environment for employment could become more complex and severe but added that the employment situation is generally stable. Furthermore, China will step up resources and funding to support employment and will prepare to roll out new policies to support employment.
- South Korean prosecutors decided not to appeal President Yoon’s release.
- Acer (2353 TW) Feb Revenue TWD 17.07bln.
- Key Japanese government panel members called for vigilance to risks of rising inflation hurting the economy.
European bourses (STOXX 600 -0.5%) opened modestly in the green, but quickly succumbed to selling pressure soon after, to display a negative picture in Europe. As it stands, indices currently reside at the bottom end of the day's ranges. European sectors are mixed vs initially opening with a slight positive bias; Real Estate takes the top spot, as yields move lower, whilst Tech is swept away by the risk tone. Novo Nordisk (NOVOB DC) says Cagrisema demonstrates superio