Stock Market Update

The S&P 500 futures are down 122 points and are trading 3.4% below fair value, the Nasdaq 100 futures are down 441 points and are trading 2.6% below fair value, and the Dow Jones Industrial Average futures are down 786 points and are trading 2.1% below fair value.

The tariff-induced global selloff has continued with equity futures sharply lower. If these levels hold, the S&P 500 will be at or near bear market territory (i.e. 20% decline from recent peak). Treasury yields are down, along with oil prices, reflecting deepening worries about an economic slowdown.

The 2-yr yield is down nine basis points to 3.58% and the 10-yr yield is down one basis point to 3.98%. WTI crude oil futures are 2.6& lower at $60.39/bbl.

The Trump administration's 10% baseline tariffs on global imports officially took effect with larger country-specific tariffs going into effect on Wednesday with limited exemptions. President Trump said there will be no deal on tariffs unless trade deficits move to “break even” or surplus.

In corporate:

• Meta Platforms (META 486.17, -18.56, -3.7%): announces "The Llama 4 herd: The beginning of a new era of natively multimodal AI innovation"
• Apple (AAPL 181.26, -7.12, -3.8%): might increase iPhone prices in US, according to Bloomberg; will keep TikTok in its application store, according to Bloomberg
• Capri (CPRI 14.15, -0.37, -2.6%): Prada (PRDSY) could soon announce takeover deal for Versace, which is owned by Capri, according to Reuters
• Goldman Sachs (GS 457.00, -13.81, -2.9%): downgraded to Equal Weight from Overweight at Morgan Stanley,
• United Airlines (UAL 55.46, -2.21, -3.8%): downgraded to Neutral from Buy at UBS

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region began the week on a sharply lower note with Hong Kong's Hang Seng (-13.2%) plunging to its lowest level since early February after Friday's holiday closure. Japan's Nikkei: -7.8%, Hong Kong's Hang Seng: -13.2%, China's Shanghai Composite: -7.3%, India's Sensex: -3.0%, South Korea's Kospi: -5.6%, Australia's ASX All Ordinaries: -4.1%.
  • In economic data:
    • China's March FX Reserves $3.241 trln (last $3.227 trln)
    • Japan's February Average Cash Earnings 3.1% yr/yr (expected 3.1%; last 1.8%) and February Overtime Pay 2.2% yr/yr (last 1.5%). February Leading Index 107.9 (expected 107.8; last 108.2) and Coincident Indicator 0.8% m/m (last 0.1%)
    • Hong Kong's February Foreign Reserves $413.10 bln (last $416.40 bln)
    • Singapore's February Foreign Reserves $381.1 bln (last $379.3 bln)
    • Australia's March ANZ Job Advertisements 0.4% m/m (last -1.3%)
  • In news:
    • Concerns about the impact of tariffs continued dominating the conversation with equity markets seeing an acceleration of their recent weakness.
    • India, Vietnam, and Taiwan have already reached out to Washington, seeking to negotiate better terms.
    • The Reserve Bank of New Zealand's shadow board recommends a 25-bps rate cut on Wednesday while Kiwibank has made the case for a 50-bps reduction.
• Major European indices trade sharply lower as the market remains concerned about the impact that new U.S. tariffs will have on global growth. STOXX Europe 60: -4.2%, Germany's DAX: -4.5%, U.K.'s FTSE 100: -3.8%, France's CAC 40: -4.2%, Italy's FTSE MIB: -4.8%, Spain's IBEX 35: -4.8%.
  • In economic data:
    • Eurozone's April Sentix Investor Confidence -19.5 (expected -8.9; last -2.9). February Retail Sales 0.3% m/m (expected 0.5%; last 0.0%); 2.3% yr/yr (expected 1.8%; last 1.8%)
    • Germany's February trade surplus EUR17.7 bln (expected surplus of EUR18.4 bln; last surplus of EUR16.2 bln). February Imports 0.7% m/m (last 5.0%) and Exports 1.8% m/m (last 0.0%). February Industrial Production -1.3% m/m (expected -0.9%; last 2.0%); -4.0% yr/yr (last -1.5%)
    • U.K.'s March Halifax House Price Index -0.5% m/m (expected 0.2%; last -0.2%); 2.8% yr/yr (last 2.8%)
    • Swiss March Foreign Reserves $725.6 bln (last $735.4 bln)
  • In news:
    • The EU will reportedly announce a unified response to the tariffs later today.
    • On a related note, EU trade commissioner Sefcovic said that free trade cooperation with other countries will be accelerated.
    • Germany's incoming Chancellor Merz called for tax cuts, deregulation, and measures to protect German competitiveness.