Stock Market Update

The S&P 500 futures are down 65 points and are trading 1.2% below fair value, the Nasdaq 100 futures are down 305 points and are trading 1.6% below fair value, and the Dow Jones Industrial Average futures are down 298 points and are trading 0.7% below fair value.

Contracts tied to the S&P 500, Nasdaq 100, and Dow industrials are sharply lower. Market participants are waiting on President Trump's reciprocal tariff announcement on April 2 and reacting to some negative tariff-related headlines over the weekend.

A Wall Street Journal report indicated that the Trump administration is considering broader tariffs on April 2, including a 20% universal tariff on all imports from all countries. 

Pre-open losses in mega cap stocks are also contributing to the downside bias. NVIDIA is lower by more than 4.0% ahead of the open. 

The 10-yr yield is down seven basis points to 4.19% and the 2-yr yield is down six basis points to 3.85%, reflecting ongoing safe-haven trading due to concerns about US trade policy. 

In corporate news:

• Apple (AAPL 216.10, -1.80, -0.8%): competing with Elon Musk over satellite expansion, according to WSJ; prepares artificial intelligence health features, according to Bloomberg
• Tesla (TSLA 247.25, -16.30, -6.2%): protests occurred over the weekend, according to Bloomberg
• TSMC (TSM 160.54, -4.71, -2.9%): will continue with plan to build new fab, according to Reuters
• Stellantis (STLA 10.92, -0.41, -3.6%): aims to purchase CO2 credits from Tesla's (TSLA) pool, according to Reuters

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region began the week on a lower note. Japan's Nikkei: -4.1%, Hong Kong's Hang Seng: -1.3%, China's Shanghai Composite: -0.5%, India's Sensex: HOLIDAY, South Korea's Kospi: -3.0%, Australia's ASX All Ordinaries: -1.7%.
  • In economic data:
    • China's March Manufacturing PMI 50.5 (expected 50.4; last 50.2) and Non-Manufacturing PMI 50.8 (expected 50.5; last 50.4)
    • Japan's February Industrial Production 2.5% m/m (expected 1.9%; last -1.1%). February Retail Sales 1.4% yr/yr (expected 2.4%; last 4.4%). February Housing Starts 2.4% yr/yr (expected -2.3%; last -4.6%) and Construction Orders -3.3% yr/yr (last 12.2%)
    • South Korea's February Industrial Production 1.0% m/m (expected 0.8%; last -2.8%); 7.0% yr/yr (expected 2.0%; last -4.7%). February Retail Sales 1.5% m/m (last -0.7%) and Service Sector Output 0.5% m/m (last -0.9%)
    • Hong Kong's February Retail Sales -13.0% yr/yr (last -3.2%)
    • Australia's February Housing Credit 0.4% m/m (last 0.4%) and Private Sector Credit 0.5% m/m, as expected (last 0.5%). March ANZ Business Confidence 57.5 (last 58.4) and March MI Inflation Gauge 0.7% m/m (last -0.2%)
  • In news:
    • Japan's Nikkei (-4.1%) showing relative weakness while markets in India and Singapore were closed for holidays.
    • The underperformance in Japan took place at the conclusion of the Japanese fiscal year and ahead of Wednesday's implementation of U.S. tariffs.
    • CK Hutchinson will reportedly not go through with the deal to sell Panama Canal assets to BlackRock this week.
    • The People's Bank of China issued CNY500 bln worth of special sovereign bonds to recapitalize a few tier-1 banks.
    • China's Manufacturing PMI (50.5) and Non-Manufacturing PMI (50.8) showed an acceleration in activity in March.
    • The Reserve Bank of Australia will meet overnight, but the likelihood of a rate cut is seen as low.
• Major European indices trade in the red. STOXX Europe 60: -1.6%, Germany's DAX: -1.9%, U.K.'s FTSE 100: -1.2%, France's CAC 40: -1.9%, Italy's FTSE MIB: -2.1%, Spain's IBEX 35: -1.8%.
  • In economic data:
    • Germany's February Retail Sales 0.8% m/m (expected 0.0%; last 0.7%); 4.9% yr/yr (last 4.0%). February Import Price Index 0.3% m/m (expected 0.0%; last 1.1%); 3.6% yr/yr (last 3.1%)
    • U.K.'s February Net Lending to Individuals GBP4.60 bln (expected GBP4.90 bln; last GBP5.95 bln). February Mortgage Approvals 65,480 (expected 66,000; last 66,040)
    • Italy's flash March CPI 0.4% m/m (expected 0.0%; last 0.2%); 2.0% yr/yr (expected 1.6%; last 1.6%)
    • Spain's January Current Account surplus EUR1.20 bln (last surplus of EUR1.67 bln)
  • In news:
    • Reuters reported that there is a growing interest in undervalued Spanish and Italian equities, though concerns about tariff impact persist.
    • British Prime Minister Starmer said that his discussions with President Trump about a trade deal have been productive.
    • European Central Bank policymaker Panetta called for caution in adjusting interest rates.