Antipodean markets are starting the week on an upbeat note after the White House whipsawed markets last week in its on-again, off-again tariff regime for Canada and Mexico.
Australian futures are pointing to a 0.9% gain for the S&P/ASX 200 index and the kiwi dollar edged up to 57.24 US cents at 7.30am in Auckland from 56.12 cents last week after Wall Street bounced back on Friday as US Federal Reserve chair Jerome Powell said the US economy was in a good place, and as US jobs growth was in line with expectations.
Markets reeled last week as the US waxed and waned on imposing tariffs on its neighbours before settling on broad exclusions for now, although commerce secretary Howard Lutnick said levies will stay in place until President Donald Trump is satisfied the flow of fentanyl across the border has ended.
Meanwhile, Australia is bracing for the US to impose a new round of steel tariffs, which it managed to avoid in Trump’s first term.
Trade war uncertainty
“Financial markets, for their part, are notably weaker as tariffs are increasingly driving concerns of waning US exceptionalism and continue to price twice as much easing this year than they were a month ago,” ANZ Bank New Zealand economists said in a note.
The Nasdaq Composite slipped into correction territory last week – where it was 10% below its peak in December – as the trade spats whipped markets back and forth, and the S&P 500 index declined 3.1% last week in its biggest weekly fall since September.
Across the Atlantic, Germany’s DAX 30 climbed 2% across the week – despite a dip on Friday – as the presumptive incoming government signalled plans to boost spending on infrastructure and defence.
Bitcoin dropped 4.6% to US$82,3376 in a broader crypto selloff after the White House set up a strategic Bitcoin reserve and digital asset stockpile.
The key data release for the week is US inflation figures, while China’s annual legislature session will also be watched for more detail on its planned stimulus. The Bank of Canada is also reviewing monetary policy, with a rate cut expected.
Reporting by Paul McBeth. Image from Acton Crawford on Unsplash.
