Equities lower into Powell & NFP, Markets now fully price four 25bps Fed cuts in 2025 - Newsquawk US Market Open

• US President Trump, when asked about the market response, said "now it settles in" and added he is open to negotiating if "other countries offer something phenomenal."
• Trump tariffs take a toll on European stocks which currently reside near lows, US futures also lower with underperformance in the RTY.
• USD attempts to claw back some of Thursday’s lost ground as attention pivots to NFP and then Fed Chair Powell thereafter, where a text and Q&A are expected.
• Yields continue to fall into NFP & Powell, markets now fully price four 25bps Fed cuts in 2025.
• Oil remains pressured & XAU continues to ease, base metals dented further by the absence of China.
• Looking ahead, US & Canadian Labour Market Reports, Moody's to review the EU's sovereign rating, Speakers including Fed’s Powell, Barr, Waller & ECB’s de Guindos.

TARIFFS/TRADE

• US Trade Advisor Navarro said the WTO is institutionalising a world of unfair trade against the US, while he said tariffs are not a negotiation and defended tariffs as a 'national emergency' which are here to protect Americans and raise revenue.
• US President Trump's tariffs have reportedly opened a rift among top Republicans in Washington and drew criticism from some Senators and large donors, according to FT.
• Mexican Deputy Economy Minister Gutierrez said Mexico is to continue a 'cool-headed' approach to Trump's tariffs and Mexican officials are to meet with Commerce Secretary Lutnick and USTR Greer next week to review autos, metals tariffs and USMCA trade agreement
• Brazil's Vice President Alckmin said he thinks the tariffs scenario will accelerate the Mercosur-EU deal and noted that technical teams from Brazil and the US will meet next week to discuss tariffs.
• US officials told the UK that they're open to talking about Britain's proposal to reduce tariffs below 10%, according to a Bloomberg reporter via social media platform X.
• China's Vice Commerce Minister said they are willing to work with the EU to maintain a rules-based multilateral trading system and provide stability for global trade.
• French Finance Minister Lombard says the EU response to the new US tariffs will be proportionate, meant to bring the two countries to the negotiating table
• UK PM "Starmer is expected to bring forward plans to water down electric car rules in the wake of Donald Trump's global tariff war", via Times' Swinford.

EUROPEAN TRADE

EQUITIES

• European bourses (STOXX 600 -2.1%) are entirely in the red, in a continuation of the Trump-tariff induced slump seen on Thursday. Price action has only really been downwards today, given the lack of fresh catalysts and with traders mindful of the key NFP report ahead.
• European sectors hold a strong negative bias, with only a couple of sectors managing to hold in positive territory. Food Beverage & Tobacco outperforms today, largely thanks to the defensive bias in the markets today. Banks continue to underperform, extending on the prior day’s losses; yields continue to drive lower, and fears of an economic slowdown continue to increase.
• US equity futures (ES -0.8%, NQ -0.5%, RTY -1.5%) are broadly on the backfoot, continuing the downside seen in the prior session which saw US stocks see their worst day since the Covid pandemic, in reaction to Trump's “Liberation Day” announcements. Focus for today will be on the US NFP report and then Fed Chair Powell thereafter.
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FX

• DXY is on a firmer footing, after initially edging lower in overnight/early European trade. Yesterday was a woeful session for the USD on account of concerns over the US' growth outlook post-tariffs with the DXY falling from an opening level at 103.37 to a trough at 101.26. Trade specific updates since have been relatively light, so focus today will be on US NFP and then Fed Chair Powell thereafter.
• EUR/USD has been weighed on in recent trade by the pickup in the USD but is still firmly above yesterday's opening level @ 1.0848. Analysts at ING attribute the recent resilience in the EUR not to a positive reappraisal of the Eurozone's growth outlook but more as a result of the "alternative liquidity offered by the euro".
• JPY is marginally softer vs. the USD and faring better than peers on account of the JPY's safe-haven appeal. BoJ speak overnight saw Governor Ueda remark that US tariffs are likely to exert downward pressure on Japan and global economies, however, it is hard to say now how US tariffs will affect Japan's price moves. Elsewhere, Deputy Governor Uchida noted that rates will be raised if underlying inflation heightens against the background of continued improvements in the economy. USD/JPY has made its way back onto a 146 handle but is still far away from yesterday's opening level at 149.21.
• After a solid showing vs. the USD yesterday which sent Cable from a 1.2968 base to a 1.3207 peak, the recent resurgence of the Dollar briefly sent the pair back onto a 1.29 handle with a session low at 1.2976.
• Antipodeans underperform today after seeing slight gains in the prior session. Gains yesterday were limited by the high-beta status of both currencies, which is the main driver of today's underperformance as internal macro drivers for Australia and New Zealand remain light.
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FIXED INCOME

• USTs continue to advance as the risk tone remains downbeat and has deteriorated further in the European morning. Bringing USTs to a 113-12+ peak, weighing on yields across the curve with the belly/10yr once again lagging. Trade updates have been relatively light since "Liberation Day", but President Trump suggested that the onus is on partners to bring him something "phenomenal". US NFP is on the docket and then focus turns to Fed Chair Powell thereafter.
• Bunds are already getting on for gains of 100 ticks on the day with Payrolls and Powell yet to print. Initial action was modest in nature, with overnight focus primarily on Japan as JGBs played catchup to Thursday’s moves and BoJ bets were altered to show just 13bps of tightening implied for the rest of 2025. Peaked at 130.75 thus far with gains of 163 ticks WTD.
• Gilts are also moving higher alongside peers. Upside of 104 ticks at most so far, higher by over 230 ticks on the week and around 350 above the low from last Wednesday’s Spring Statement.
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COMMODITIES

• Crude continues its recent slump with WTI and Brent currently down by around USD 2.60/bbl and USD 2.50/bbl respectively. There has been little fresh fundamental in today's trade, but pressure is ultimately a factor of a) negative risk tone. b) fears of slowing economic growth. c) OPEC+ decided to increase output by a larger-than-scheduled 411k barrels per day in May. Brent Jun'25 currently at the lower end of a USD 67.53-70.11/bbl range.
• Precious metals are on the backfoot today, with spot silver underperforming vs gold. Specifically for the yellow-metal, price action was rangebound overnight and remained within overnight ranges for most of the European morning, before then succumbing to some modest selling pressure alongside a broader pick-up in the Dollar. Currently trading around USD 3,090/oz in a USD 3,078.60-3,116.67/oz range.
• Base metals are entirely in the red, given the risk tone and in a continuation of the recent slump across the commodity complex; a holiday in China, is also a factor for the downside today.
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NOTABLE DATA RECAP

• German Industrial Orders MM (Feb) 0.0% vs. Exp. 3.5% (Prev. -7.0%)
• French Industrial Output MM (Feb) 0.7% vs. Exp. 0.4% (Prev. -0.6%, Rev. -0.5%)
• Spanish Ind Output Cal Adj YY (Feb) -1.9% (Prev. -1.0%, Rev. -1.2%)
• EU HCOB Construction PMI (Mar) 44.8 (Prev. 42.7); Italian HCOB Construction PMI (Mar) 52.4 (Prev. 48.2); HCOB Construction PMI (Mar) 40.3 (Prev. 41.2); HCOB Construction PMI (Mar) 43.8 (Prev. 39.8)
• UK S&P Global Composite PMI - Output (Mar) 51.0 (Prev. 50); S&P Global Construction PMI (Mar) 46.4 vs. Exp. 46 (Prev. 44.6)
• Italian Retail Sales NSA YY (Feb) -1.5% (Prev. 0.9%); Retail Sales SA MM (Feb) 0.1% (Prev. -0.4%)
• Swedish CPIF Flash YY (Mar) 2.30% vs. Exp. 2.60% (Prev. 2.90%); CPIF Flash MM (Mar) -0.50% vs. Exp. -0.20% (Prev. 0.90%)

NOTABLE EUROPEAN HEADLINES

• UK government said almost GBP 14bln of R&D funding is allocated to bolster life sciences, green energy, space and beyond to improve lives and grow the economy.
• Goldman Sachs cuts the UK's 2025 GDP growth forecast to 0.7% (prev. 0.8%).
• Deutsche Bank says the latest US tariffs could hit Europe and the UK's GDP by 0.4-0.7% percentage points and 0.3-0.6 percentage points respectively.

NOTABLE US HEADLINES

• US Social Security faces thousands more job cuts, according to WaPo. WaPo notes that the Social Security Administration is drafting plans to begin layoffs of potentially thousands more employees as soon as next week.

GEOPOLITICS

MIDDLE EAST

• Israeli military say they have "eliminated" Hassan Farhat, a Hamas commander in Lebanon
• Israeli media reported that the Israeli army launched raids on large areas in the Gaza Strip, according to Al Jazeera
• Houthi-affiliated media reports US aggression on the Kahlan area, east of Saada city, northern Yemen, according to Al Jazeera.
• Iran reportedly abandons Houthis under relentless US bombardment and ordered its military personnel to leave Yemen, according to The Telegraph.
• US President Trump said he spoke with Israeli PM Netanyahu on Thursday who may visit the US next week, although it was separately reported that Israeli PM Netanyahu's visit to the White House will likely take place in a few weeks.
• Turkey said Israel's attacks on regional countries have made Israel the biggest threat to regional security, while it added that Israel is a regional destabiliser and is feeding chaos and terror.
• Saudi Crown Prince received a phone call from Iran's President during which they discussed developments in the region and issues of common interest.

RUSSIA-UKRAINE

• US President Trump's inner circle advises against a call with Russian President Putin until he commits to a full ceasefire.
• Russian envoy Dmitriev said lots of differences remain, but a diplomatic solution is possible and there is already some progress on trust-building measures, while he sees a positive dynamic in US-Russian relations and said Several meetings are needed to sort out differences. Dmitriev also stated that a long-term solution that takes into account Russian security concerns is what is needed, as well as commented that they are not asking for a lifting of sanctions and that they can do a deal with the US on rare earths.
• Moscow's mayor said Russian air defences repelled drones approaching Moscow and specialists are examining fallen fragments.

CRYPTO

• Bitcoin is a little firmer and trades just ahead of USD 84k.

APAC TRADE

• APAC stocks resumed the post-Liberation Day selling after Wall St suffered its worst loss since 2020, while fresh drivers are light amid the Greater China holiday closures and with participants now awaiting US jobs data.
• ASX 200 re-entered correction territory with the declines led by heavy losses in tech and energy in which the latter was pressured after oil prices fell by around 7% amid tariff turmoil and news that OPEC+ decided to increase output by a larger-than-scheduled 411k barrels per day in May.
• Nikkei 225 sold off again and fell below the USD 34,000 level with better-than-expected Household Spending data doing little to spur a recovery.
• KOSPI was initially choppy but ultimately weakened after the Constitutional Court upheld President Yoon's impeachment which sparked some angry protests and triggered an election to be held within 60 days.

NOTABLE ASIA-PAC HEADLINES

• BoJ Governor Ueda said US tariffs are likely to exert downward pressure on Japan and global economies, while he added it is hard to say now how US tariffs will affect Japan's price moves and they will closely monitor US tariff impact on Japan, overseas economic and price developments in deciding monetary policy. Ueda said they will scrutinise data, including from hearings, available at the time of each policy meeting to gauge the US tariff impact on Japan's economy and prices.
• BoJ Deputy Governor Uchida said they will raise interest rates if underlying inflation heightens against the background of continued improvements in the economy. Uchida said they will examine, without any preset idea if economic and price forecasts laid out in the quarterly report will be achieved, as well as scrutinise at each meeting economic, and price developments and risks including the impact from US tariffs.
• South Korean Constitutional Court ruled to oust impeached President Yoon with the decision made unanimously.

DATA RECAP

• Japanese All Household Spending MM (Feb) 3.5% vs. Exp. 0.5% (Prev. -4.5%); YY (Feb) -0.5% vs. Exp. -1.7% (Prev. 0.8%)