- Equities: Recession fears rise amid market concerns about tariffs; Japan equities rose, driven by weakening yen
- Credit: With yields near 15-year heights and rate compression likely to outweigh spread widening, high-quality credit (A/BBB) remains attractive
- FX: What could arrest this USD pull-back?
- Rates: Fed will not have sufficient reason to adjust rates or significantly tweak the Summary of Economic Projections; market not expecting cut this week but is pricing in 2-3 cuts this year
- The Week Ahead: Keep a lookout for US Initial Jobless Claims; Japan Industrial Production
Trump’s tariff policy and trade tensions cause market declines. Elevated trade uncertainty continued to dent business confidence and investor sentiment. Fears of a US recession eroded the American exceptionalism narrative in early March. The Atlanta Fed’s GDPNow model flagged that US GDP growth would turn negative in 1Q25, driven by a significant widening of the country’s trade deficit. As a result, the Dow Jones and NASDAQ indices lost 3.1% and 2.4% respectively. Similarly, the STOXX Europe 600 fell by 1.2% amid negative sentiments regarding US trade policy. This week, all eyes are on the upcoming Federal Open Market Committee (FOMC) meeting where the Fed is widely expected to hold rates constant against a challenging backdrop of growth concerns and somewhat sticky inflation.
Asia ex-Japan equities continued to rise due to expectations of further Chinese government stimulus. The SHCOMP and CSI 300 Index increased 1.4% and 1.6% respectively. Japan equities rose modestly with the Nikkei 225 Index rising by 0.4%. This rise was due to the weakening of the yen which provided a tailwind for Japanese exporters.
Topic in focus: Europe defence sector to benefit from strained transatlantic ties. Europe’s defence stocks have been on a tear amid rising geopolitical unease following Trump’s inauguration in January this year. The expectation that Europe will have to increase military spending and shoulder more of their own defence burden have investors betting on a resurgence in the sector. The STOXX Europe aerospace & defence index has increased by almost 35% on a YTD basis amid tense negotiations between Ukraine President Volodymyr Zelensky and US President Donald Trump. European leaders are now under immense pressure to boost defence spending in the wake of what many are calling a new paradigm under Trump—where US security guarantees are becoming increasingly scarce—to deter any future moves by Russia. To that end, Germany’s incoming chancellor, Friedrich Merz, has announced a deal to increase the country’s debt headroom to allow a boom in military spending.
Incidentally, many of the companies that are riding this new defence tailwind are also expected beneficiaries of the space economy theme—a topic we highlighted in 2H24. Companies such as Thales (HO FP) and BAE (BA LN) systems, which have rallied 80.4% and 44.3% respectively on a YTD basis, are also exposed to growth drivers in the form of increasing demand for satellite positioning, navigation & timing, and earth observation. The combined tailwinds of rising military spending as well as secular growth in the space economy bodes well for the European defence sector moving forward.
Download the PDF to read the full report which includes coverage on Credit, FX, Rates, and Thematics.
本資訊是由星展銀行集團公司（公司註冊號： 196800306E）（以下簡稱“星展銀行”）發佈僅供參考。其所依據的資訊或意見搜集自據信可靠之來源，但未經星展銀行、其關係企業、關聯公司及聯屬公司（統稱“星展集團”獨立核實，在法律允許的最大範圍內，星展集團針對本資訊的準確性、完整性、時效性或者正確性不作任何聲明或保證（含明示或暗示）。本資訊所含的意見和預期內容可能隨時更改，恕不另行通知。本資訊的發佈和散佈不構成也不意味著星展集團對資訊中出現的任何個人、實體、服務或產品表示任何形式的認可。以往的任何業績、推斷、預測或結果模擬並不必然代表任何投資或證券的未來或可能實現的業績。外匯交易蘊含風險。您應該瞭解外匯匯率的波動可能會給您帶來損失。必要或適當時，您應該徵求自己的獨立的財務、稅務或法律顧問的意見或進行此類獨立調查。
本資訊的發佈不是也不構成任何認購或達成任何交易之要約、推薦、邀請或招攬的一部分；在以下情況下，本資訊亦非邀請公眾認購或達成任何交易，也不允許向公眾提出認購或達成任何交易之要約，也不應被如此看待：例如在所在司法轄區或國家/地區，此類要約、推薦、邀請或招攬係未經授權；向目標物件進行此類要約、推薦、邀請或招攬係不合法；進行此類要約、推薦、邀請或招攬係違反法律法規；或在此類司法轄區或國家/地區星展集團需要滿足任何註冊規定。本資訊、資訊中描述或出現的服務或產品不專門用於或專門針對任何特定司法轄區的公眾。
本資訊是星展銀行的財產，受適用的相關智慧財產權法保護。本資訊不允許以任何方式（包括電子、印刷或者現在已知或以後開發的其他媒介）進行複製、傳輸、出售、散佈、出版、廣播、傳閱、修改、傳播或商業開發。
星展集團及其相關的董事、管理人員和/或員工可能對所提及證券擁有部位或其他利益，也可能進行交易，且可能向其中所提及的任何個人或實體提供或尋求提供經紀、投資銀行和其他銀行或金融服務。
在法律允許的最大範圍內，星展集團不對因任何依賴和/或使用本資訊（包括任何錯誤、遺漏或錯誤陳述、疏忽或其他問題）或進一步溝通產生的任何種類的任何損失或損害（包括直接、特殊、間接、後果性、附帶或利潤損失）承擔責任，即使星展集團已被告知存在損失可能性也是如此。
若散佈或使用本資訊違反任何司法轄區或國家/地區的法律或法規，則本資訊不得為任何人或實體在該司法轄區或國家/地區散佈或使用。本資訊由 (a) 星展銀行集團公司在新加坡；(b) 星展銀行（中國）有限公司在中國大陸；(c) 星展銀行（香港）有限責任公司在中國香港[DBS CY1] ；(d) 星展（台灣）商業銀行股份有限公司在台灣；(e) PT DBS Indonesia 在印尼；以及 (f) DBS Bank Ltd, Mumbai Branch 在印度散佈。