Asian stock markets faced significant losses on Friday, as investor sentiment soured following troubling signals from U.S. corporate earnings and central bank meetings, which underscored the growing uncertainty surrounding the global economy.
Hong Kong’s stock market saw heavy selling, with its tech sector dropping nearly 4% after a recent rally. The broader index of Chinese stocks listed in the city fell for a third consecutive day, while stocks in Indonesia and Taiwan also declined. Japanese markets fluctuated throughout the day.
Meanwhile, European futures indicated a pessimistic opening, with U.S. counterparts showing a marginal decline. The dollar index inched higher, while U.S. Treasuries remained steady.
Global economic outlooks are clouded by concerns over tariffs and disappointing corporate earnings. U.S. President Donald Trump recently announced that reciprocal tariffs and additional sector-specific tariffs would take effect on April 2, a move that could significantly disrupt the global economy.
Todd Jablonski, global head of multi-asset investments at Principal Asset Management, highlighted the uncertainty President Trump’s policies have injected into the market, saying, “We’ve seen a wave of uncertainty in the market like we haven’t for many years.” The firm has responded by reducing risk exposure in its multi-asset portfolios.
U.S.-based companies such as FedEx and Nike have been hit hard by these developments. FedEx, often viewed as an economic bellwether, revised its profit outlook downward due to higher costs and weakening demand. Nike also cited tariffs and geopolitical tensions as factors that would affect its earnings.
Attention is now shifting to earnings reports from Chinese companies, with U.S.-listed PDD Holdings seeing an increase in its stock price following better-than-expected results, though the company acknowledged the challenges posed by global uncertainty.
Central Bank Responses and Ongoing Policy Uncertainty
This week, central banks, including the U.S. Federal Reserve, the Bank of Japan, and the Bank of England, all expressed concern that tariffs were clouding their economic outlooks and complicating policymaking.
The European Union delayed a proposed tariff on American whiskey, but officials indicated a willingness to engage with the U.S. before making further decisions on retaliatory tariffs.
The Japanese yen weakened after consumer inflation showed signs of slowing, while the British pound and the euro both fell following the Bank of England’s decision to maintain interest rates. Nick Twidale, chief analyst at AT Global Markets, noted that the euro was consolidating as traders absorbed the Federal Reserve’s latest update and the EU’s involvement in Ukraine’s defense efforts. “The euro needs another positive catalyst to push it higher,” he said.
Tensions also ran high in Brussels, where European Union leaders debated weapons deliveries to Ukraine and their representation in U.S.-led diplomacy efforts, struggling to establish a unified strategy on Ukraine.
Volatile Market Conditions Ahead
U.S. stock markets are also bracing for increased volatility ahead of the expiration of $4.5 trillion in options contracts later on Friday, an event known as “triple witching,” which is known for triggering sharp market swings.
“We will go up and down as policy uncertainty continues,” said Michael Rosen, chief investment officer at Angeles Investments. “Investor sentiment is going to be very volatile, and that will be reflected in the market.”
Indonesia’s stock market saw its benchmark index drop by as much as 2.6% before recovering some of the losses. Rising political concerns surrounding President Prabowo Subianto contributed to investor unease.
Meanwhile, the Turkish lira continued its downward trajectory after a turbulent week marked by the detention of Istanbul Mayor Ekrem Imamoglu, a prominent rival to President Recep Tayyip Erdogan.
Commodities and Cryptocurrencies
Oil prices saw an uptick after the U.S. imposed sanctions on a Chinese refinery, a significant move to curb Iran’s oil exports. Gold, however, fell back from recent highs.
In the cryptocurrency market, Bitcoin dropped 0.6% to $84,001.82, while Ether fell 0.5% to $1,969.58.
Market Overview:
Stocks:
- S&P 500 futures down 0.1%
- Nasdaq 100 futures stable
- Dow Jones Industrial Average futures down 0.1%
- MSCI Asia Pacific Index down 0.4%
- MSCI Emerging Markets Index down 0.6%
Currencies:
- Bloomberg Dollar Spot Index up 0.1%
- Euro down 0.1% to $1.0836
- Japanese yen down 0.3% to 149.30 per dollar
- British pound down 0.2% to $1.2938
Bonds:
- U.S. 10-year Treasury yield up 1 basis point to 4.25%
- Germany’s 10-year yield down 1 basis point to 2.77%
- U.K. 10-year yield up 1 basis point to 4.65%
Commodities:
- Brent crude up 0.2% to $72.17 per barrel
- Spot gold down 0.5% to $3,031.17 per ounce
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