Asian share markets and the US dollar began the week cautiously on Monday, reflecting persistent confusion and uncertainty surrounding US trade policy.
While President Donald Trump projected optimism about ongoing negotiations, conflicting signals and a lack of concrete evidence kept investors largely on edge ahead of a week packed with major economic data releases and crucial earnings reports from technology giants.
Trade policy fog clouds market outlook
Despite President Trump’s assertions that progress is being made on trade deals with China and other nations, tangible proof remains elusive.
Underscoring the ambiguity, Treasury Secretary Scott Bessent failed to corroborate Trump’s claim over the weekend that substantive tariff talks with China were actively underway.
This lack of clarity is becoming a significant drag on market sentiment and economic planning.
“The uncertainty itself is at least as damaging as the tariffs themselves, hurting the US economy at least as much as the rest of the world,” Christian Keller, head of economics research at Barclays, explained to Reuters.
He warned that even if the current earnings season delivers robust results, many companies are likely bracing for impact. “Many companies will likely prepare to hunker down until visibility improves,” Keller added. “This makes a recession increasingly likely.”
Asia trades tentatively, Futures dip
Early market activity across Asia was subdued. MSCI’s broadest index of Asia-Pacific shares outside Japan saw a marginal gain of 0.1%. Japan’s Nikkei rose 0.9%, and South Korea’s Kospi firmed 0.2%.
Futures contracts pointed towards a modestly positive open in Europe, with EUROSTOXX 50, FTSE, and DAX futures all showing slight gains.
However, futures for major US indices dipped in early Asian trade, suggesting the underlying caution remained. S&P 500 futures eased 0.4%, and Nasdaq futures fell 0.5%.
The S&P 500, despite bouncing nearly 12% from its April 8th low, still sits 10% below its peak, highlighting the ground yet to be recovered.
Earnings and economic data floodgate opens
While corporate earnings reported so far have generally been supportive (though BofA noted a slight decrease in the percentage of companies beating EPS estimates compared to the previous quarter), this week brings a deluge of potentially market-moving information.
Approximately 180 S&P 500 companies, representing over 40% of the index’s market value, are scheduled to report earnings, including mega-cap tech titans Apple, Microsoft, Amazon, and Meta Platforms.
Simultaneously, a raft of critical US economic data is due, including reports on employment (payrolls), first-quarter gross domestic product (GDP), and core inflation.
The payrolls figure is expected to show a respectable gain of 135,000 jobs, while inflation is anticipated to ease slightly.
However, significant uncertainty surrounds the GDP reading, with analysts noting that a surge in gold imports could skew the headline number lower.
While the median forecast points to meager 0.4% annualized growth, the Atlanta Fed’s GDPNow model suggests a potential contraction (-0.4%) when excluding the gold import effect.
Dollar remains ‘hostage’ to policy whims
The upcoming economic data, particularly the timely jobs report, will be crucial in shaping market expectations for Federal Reserve policy.
Futures markets currently imply a 64% probability of a rate cut in June, with a total of 85 basis points of easing priced in by year-end.
“We expect another solid non-farm payrolls figure, pushing back against expectations that the Fed will ease policy in June,” Reuters quoted Jonas Goltermann, deputy chief markets economist at Capital Economics, as saying.
Such an outcome could support the US dollar’s recent bounce from three-year lows.
However, Goltermann cautioned, “The Trump administration’s unconventional approach across a range of policy areas will probably cause some longer-lasting damage to confidence in the US as a safe haven… The greenback is still hostage to the administration’s whims.”
The dollar index remained relatively steady near 99.695, above recent lows, while the euro held around $1.1350.
Upcoming consumer price data from Germany and the Eurozone is expected to show further easing inflation, reinforcing expectations for another ECB rate cut in June.
Meanwhile, the Bank of Japan, meeting this week, is widely expected to maintain its current policy stance given the global economic and trade uncertainties.
The dollar edged up slightly against the yen to 143.65, but remained down over 4% for April.
Treasuries steady, gold eases, oil quiet
US Treasuries held relatively steady after President Trump assured markets he would not attempt to fire Fed Chair Jerome Powell, with 10-year yields hovering around 4.235%.
The tentative improvement in risk sentiment saw gold ease back slightly from its record highs, trading around $3,307 per ounce.
Oil prices started the week quietly, with Brent crude near $66.98 and US crude around $63.09, still influenced by global slowdown worries and OPEC supply plans.
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