NEW YORK: Asian equities were primed to track declines on Wall Street as investors braced themselves for the next trade war salvo and weighed up conflicting signals from US corporate earnings.
Equity index futures for Japan and Hong Kong were down, while Australian shares opened little changed. US futures were flat after the S&P 500 closed slightly down Thursday (March 20), a sign of fragile sentiment just a week after the benchmark slipped into a correction. A benchmark of US-listed Chinese shares fell 3.8 per cent.
The sluggish US moves stalled a nascent rebound in global stocks earlier in the week, underscoring investor jitters in the run-up to an increase of US tariffs. Earlier this week, President Donald Trump said both broad reciprocal tariffs and certain additional sector-specific tariffs would come into force on April 2.
Investors also had earnings to digest, yet another mixed signal for a market struggling to find a direction. In late hours, FedEx Corp. - an economic barometer - sank after cutting its profit outlook. But Micron Technology Inc. gave an upbeat sales forecast and Nike Inc.’s results surpassed analysts’ expectations.
There was some good news for investors from economic data. Existing home sales in the US topped estimates, while initial jobless claims, a measure of unemployment, were in line with expectations in a sign of a healthy labour market.
"While the bottom of the recent correction is likely in, we probably haven’t seen the end of volatility,” said Daniel Skelly, head of Morgan Stanley’s Wealth Management Market Research & Strategy Team. "Policy uncertainty hasn’t disappeared, and the market remains sensitive to sentiment shifts.”
Treasuries were largely unchanged Thursday, and an index of the dollar was roughly flat. The yen was slightly stronger early Friday after core CPI came higher than estimates. The pound held losses after the Bank of England voted to stand pat on rates.
Weakness on Wall Street also comes ahead of a big test later Friday when US$4.5 billion of options contracts expire in an event known as triple witching that often stokes volatility.
After keeping rates steady this week, Federal Reserve Chair Jerome Powell downplayed growth concerns and the price hits that could be on the way from a trade war. President Donald Trump’s administration is preparing to announce a fresh wave of tariffs on April 2, though the exact scope isn’t clear.
"We will go up and down as policy uncertainty continues,” Michael Rosen, chief investment officer at Angeles Investments, said in an interview at Bloomberg headquarters in New York. "Investor sentiment is going to be very volatile, and that will be reflected in the market.”
Elsewhere, revenue for PDD Holdings Inc., which runs the Temu online marketplace, grew slower than expected after intensifying domestic competition and US tariffs crimped its expansion.
The European Union this week delayed a proposed tariff on American whiskey. The trading bloc is ready talk to Trump before making further decisions on retaliatory tariffs, Ireland’s deputy prime minister said.
In other corporate news, Apple Inc. reshuffled executives to get its artificial intelligence efforts back on track after months of delays and stumbles, according to people familiar with the situation. - Bloomberg
