Global markets showed signs of recovery on Friday, as Asian shares bounced back from a tumultuous selloff earlier in the week. Investors, shaken by escalating global trade tensions, flocked to safe-haven assets like gold, which surged to an all-time high. The announcement of a potential US government shutdown aversion provided a sense of relief, further boosting market confidence.
Asian Markets Rebound
In a sign of optimism, stocks in the Asia-Pacific region gained momentum, with the MSCI Asia-Pacific index outside Japan climbing by 0.95%. Despite this uptick, the index is still on track for a 1.5% loss this week due to ongoing trade disputes affecting global markets.
- Nikkei: Up by 0.8%
- Hang Seng Index: Increased by 2.4%
- CSI 300: Rose by 2.3%
- Shanghai Composite: Gained 1.7%
Alvin Tan, the head of Asia FX strategy at RBC Capital Markets, noted, “Today’s news from Congress is providing a much-needed boost to market sentiment.”
U.S. Stock Futures Surge
After Senate Democrat Chuck Schumer indicated support for a Republican stopgap funding bill, US stock futures reacted positively. The Nasdaq futures surged by over 1%, while the S&P 500 futures increased by 0.6%.
European markets also followed suit, with EUROSTOXX 50 futures advancing by 0.5% and FTSE futures up by 0.3%. The DAX futures climbed by 0.6%, signaling a broader recovery trend.
Trade Tensions and Tariff Threats
Amidst these developments, former President Donald Trump intensified trade threats, proposing a 200% tariff on European wine and spirits unless the EU retracts its own retaliatory tariffs on American products.
Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho, commented, “Trump is establishing a clear message that any retaliation will be met with even stronger countermeasures.” This rhetoric contributed to a steep selloff on Wall Street, confirming that the S&P 500 is in correction territory.
Safe-Haven Assets Shine
In light of these trade tensions, traditional safe-haven assets like gold have thrived, reaching a record price of $2,993.80 per ounce, reflecting a 2.6% increase for the week. This trend highlights investors’ growing concerns over market volatility.
Currency Movements
The U.S. dollar regained some strength on Friday amid safe-haven buying but remained near recent lows. The euro traded slightly lower at $1.08465, while the British pound dipped to $1.29475. The euro found support from Germany’s ambitious €500 billion fiscal plan aimed at spurring growth.
Germany’s parliament is slated to vote on these measures soon, with the new parliament expected to convene on March 25. Meanwhile, a series of central bank meetings, including one from the U.S. Federal Reserve, are on the horizon, as investors seek clarity on interest rates amid the uncertainty surrounding trade policies.
Oil Prices Recover
In commodities, oil prices also experienced a rebound after previous declines. Brent crude prices rose by 0.67% to $70.35 a barrel, while U.S. West Texas Intermediate crude increased by 0.75% to $67.05 per barrel.
In summary, while the global market is navigating through turbulent waters, the resilience shown by various indices and the surge in safe-haven assets indicate a cautious optimism as investors await further developments in trade relations and fiscal policies.
