• APAC stocks saw a rebound from Friday's Asian session sell-off; participants digested better-than-expected Chinese PMI data.
• US Commerce Secretary Lutnick said there will be tariffs on Canada and Mexico on Tuesday but Trump will decide at what levels.
• China is studying countermeasures in response to the US March 4th tariff threat; will likely include both tariffs and a series of non-tariff measures.
• Ukrainian President Zelensky said Ukraine is ready to sign the minerals deal; believes the relationship with the US will continue.
• European equity futures indicate a higher cash market open with Euro Stoxx 50 futures up by 0.7% after the cash market closed with losses of 0.2% on Friday.
• DXY is a touch softer, EUR/USD has moved back onto a 1.04 handle, USD/JPY pulled back after hitting resistance at the 151.00 level.
• Looking ahead, highlights include EZ HICP, US ISM Manufacturing PMI, Japanese Unemployment Rate, Fed’s Musalem.

SNAPSHOT

US TRADE

• US stocks endured a choppy session on Friday but ultimately closed in the green and at session highs as they saw a notable bid into settlement amongst month-end and despite the initial sell-off seen post-US open, while US January PCE was the key scheduled data but turned out to be a damp squib and printed in line with expectations. Nonetheless, the session highlight came after a fiery and argumentative meeting between US President Trump and Ukrainian President Zelensky at the Oval Office where Trump told Zelensky "You are gambling with World War III" and "You either make a deal or we are out". Following the meeting, Trump posted on Truth that Zelensky disrespected the US and that he could come back when ready for peace, while the joint presser was cancelled with the deal not signed and leaders throughout Europe announced their solidarity with Ukraine.
• SPX +1.59% at 5,955, NDX +1.62% at 20,884, DJI +1.39% at 43,841, RUT +1.09% at 2,163.
• Click here for a detailed summary.

TARIFFS/TRADE

• US Commerce Secretary Lutnick said Mexico and Canada have done a reasonable job on the border and there will be tariffs on Canada and Mexico on Tuesday but President Trump will decide at what levels. Lutnick added that China tariffs are set unless they end fentanyl trafficking into the US.
• White House official announced on Saturday evening that President Trump ordered to bolster the supply of forest resources and directed the Commerce Secretary to investigate harm to US National Security from imported lumber, while any tariffs resulting from the lumber investigation would be added to other tariffs, including fentanyl-related tariffs on Canada, Mexico and China. Furthermore, the official said China, Canada and Mexico could take quick action to avert fentanyl-related tariffs.
• China is studying countermeasures in response to the US March 4th tariff threat, while countermeasures will likely include both tariffs and a series of non-tariff measures with US agricultural and food products most likely to be listed, according to Global Times.

NOTABLE HEADLINES

• Fed's Goolsbee (2025 voter) said on Friday that inflation data is still higher than they would like but still appears on a path back to 2% inflation, while he added everything keeps them up at night and they should start working through scenarios of the Trump economic agenda although don't have enough clarity to forecast off the Trump agenda yet.
• US President Trump posted on Truth "We should spend less time worrying about Putin, and more time worrying about migrant rape gangs, drug lords, murderers, and people from mental institutions entering our Country - So that we don’t end up like Europe!".
• US President Trump commented on Truth "Treasury Department has announced that they are suspending all enforcement of the outrageous and invasive Beneficial Ownership Information (BOI) reporting requirement for U.S. Citizens".
• US Treasury Secretary Bessent said will appoint an affordability czar to address high prices, according to CBS News.
• US House Speaker Johnson said he wants a clean Continuing Resolution for the fiscal year through September, according to Punchbowl.

APAC TRADE

EQUITIES

• APAC stocks began the new trading month mostly higher in a rebound from Friday's Asian session sell-off and despite geopolitical uncertainty from the fallout of the Trump-Zelensky heated exchange in the Oval Office, while participants digested better-than-expected Chinese PMI data from over the weekend.
• ASX 200 traded higher with gains led by strength in the tech, real estate, telecoms, miners and materials sectors, while quarterly Australian company gross profits growth smashed forecasts.
• Nikkei 225 recovered some of Friday’s substantial losses despite the lack of fresh drivers and ongoing tariff uncertainty.
• Hang Seng and Shanghai Comp were underpinned following the better-than-expected official Chinese Manufacturing PMI data over the weekend which showed a surprise return to expansion territory, while Caixin Manufacturing PMI also topped forecasts. However, the gains in the mainland were contained as the tariff threat lingered with US Commerce Secretary Lutnick noting that China tariffs are set unless they end fentanyl trafficking into the US and with China reportedly studying relevant countermeasures in response to the US March 4th tariff threat.
• US equity futures (ES +0.2%, NQ +0.2%) are a touch firmer after last Friday’s late ramp-up.
• European equity futures indicate a higher cash market open with Euro Stoxx 50 futures up by 0.7% after the cash market closed with losses of 0.2% on Friday.

FX

• DXY faded the gains seen on Friday during the Trump-Zelensky Oval Office bust-up although the downside was limited with participants awaiting this week’s key events including Tuesday’s tariff deadline for Canada, Mexico and China related to the border and fentanyl, while President Trump also ordered a probe into alleged dumping of lumber in the US market.
• EUR/USD took advantage of the dollar weakness and reclaimed the 1.0400 handle, while several European leaders and senior representatives met in London on Sunday for a summit to discuss support for Ukraine.
• GBP/USD rebounded from last week’s trough but with upside limited amid light newsflow from the UK aside from the geopolitical-related rhetoric concerning Ukraine.
• USD/JPY gradually pulled back after hitting resistance at the 151.00 level with the pair dragged lower amid the softer dollar and the early mild upside in Japanese yields.
• Antipodeans received some mild reprieve after trickling lower throughout most of last week, while the latest manufacturing PMI data from Australia and New Zealand’s largest trading partner also provided some encouragement.
• PBoC set USD/CNY mid-point at 7.1745 vs exp. 7.2857 (prev. 7.1738).
• SNB Chairman Schlegel said the SNB will only reintroduce negative interest rates if necessary.

FIXED INCOME

• 10yr UST futures briefly retreated beneath the 111.00 level alongside the gains in stocks and with demand not helped by looming corporate supply with Synopsys preparing a USD 10bln bond sale to finance the Ansys deal and with Mars preparing to sell more than USD 25bln of bonds this week to finance the Kellanova takeover.
• Bund futures gapped lower at the open to beneath the 133.00 level after it was reported over the weekend that Germany discussed setting up special funds for defence and infrastructure, while German Chancellor Scholz commented that they need to financially and militarily support Ukraine.
• 10yr JGB futures conformed to the subdued picture in the fixed income space as Japanese yields slightly edged higher including the 30-year JGB yield which touched its highest since October 2007.

COMMODITIES

• Crude futures mildly gained amid geopolitical uncertainty following the Trump-Zelensky Oval Office bust-up last week and amid tensions in the Middle East with Israel blocking aid to Gaza after the first phase of the truce deal expired over the weekend with no phase two deal in place. Furthermore, stronger-than-expected Chinese Manufacturing PMI data in which the official reading returned to expansion territory also provides some demand-side optimism.
• Guyana’s President Ali said a Venezuelan armed patrol ship entered Guyanese waters on Saturday morning and threatened oil production ships, claiming they were in Venezuelan waters, according to News Source Guyana.
• Canada is to extend mineral exploration tax credit for two more years, according to the Natural Resources Minister.
• Russian President Putin’s ally Matthias Warnig pushes a deal to restart the Nord Stream 2, according to FT.
• Spot gold began the new trading month on the front foot after spending most of last week pulling back from record highs.
• Copper futures benefitted from the positive risk environment and after the encouraging Chinese PMI data.

CRYPTO

• Bitcoin surged on Sunday and briefly rose to back above the USD 94,000 level following comments from US President Trump who named cryptocurrencies that will be included in a strategic reserve of digital assets.
• US President Trump is to host the first White House cryptocurrency summit on March 7th. Trump also commented that the executive order on digital assets directed a strategic reserve that included XRP, Sol and ADA. Trump also stated that BTC and ETH, as other valuable cryptocurrencies, will be at the heart of the reserve, as well as commented that he loves Bitcoin and Ethereum.

NOTABLE ASIA-PAC HEADLINES

• PBoC and financial regulators held a symposium on financial support of private enterprises and five private enterprises attended the symposium including Geely Holding and SenseTime.

DATA RECAP

• Chinese Manufacturing PMI (Feb) 50.2 vs Exp. 49.9 (Prev. 49.1)
• Chinese Non-Manufacturing PMI (Feb) 50.4 vs Exp. 50.3 (Prev. 50.2)
• Chinese Composite PMI (Feb) 51.1 (Prev. 50.1)
• Chinese Caixin Manufacturing PMI Final (Feb) 50.8 vs. Exp. 50.3 (Prev. 50.1)

GEOPOLITICS

MIDDLE EAST

• Israel conducted strikes on Gaza on Sunday which killed four Palestinians, according to Reuters citing Gaza health officials. Furthermore, the Israeli military said it eliminated suspects who were planting an explosive device in Gaza.
• Israeli PM’s office said they will adopt the outline of US envoy Witkoff for a temporary ceasefire for the Ramadan and Passover holidays.
• Israel announced that it had ceased the entry of humanitarian aid into Gaza. It was separately reported that Israel’s Foreign Minister Saar said Hamas rejected the framework for a ceasefire and this is why were not able to move forward for the time being, while he added that the commitment for goods to enter was only for the first phase which has lapsed and the US understands Israel’s stance on the decision to halt Gaza aid. Saar also said that Israel is ready for the second phase of the agreement but “not for free”.
• Israel plans to increase pressure on Hamas to accept the proposal to extend the first phase of the Gaza agreement, according to Israeli media cited by Asharq News.
• Hamas said Israeli PM Netanyahu’s decision to halt humanitarian aid is cheap blackmail and a coup on the agreement while it urged Gaza ceasefire mediators to compel Israel to end punitive measures against Gaza. Furthermore, a Hamas official said the group will not agree to extend the first phase of the ceasefire deal and that the hostage release will only occur under the agreed phased deal, according to Reuters.
• Egypt’s Foreign Minister said Egypt will continue intensive efforts to start negotiations on the second phase of a Gaza ceasefire deal and the Gaza reconstruction plan has been completed which will be presented at the emergency Arab summit on Tuesday for approval, while foreign ministers of the Organisation of Islamic Cooperation will meet in Saudi Arabia after the emergency summit. Furthermore, Egypt’s Foreign Minister said using aid as a weapon of collective punishment and starvation in Gaza cannot be accepted or permitted.

RUSSIA-UKRAINE

• Ukrainian President Zelensky said late on Friday that he wants peace but will require security guarantees to prevent Russia from attacking again, while he is very thankful to US President Trump and said he respects him and the American people but refuses to apologise and believes the relationship with Trump can be repaired.
• Ukrainian President Zelensky commented on Sunday that they are ready to sign the minerals deal which he believes the US would be ready to sign as well, while he believes the relationship with the US will continue. Zelensky also said there has not been a day when they have not felt gratitude to the US for support and after meeting with European leaders, he said there will be more diplomatic peace efforts for the sake of Ukraine, all of Europe, and definitely America.
• Ukrainian President Zelensky met with UK PM Starmer on Saturday, while Ukraine and the UK signed an agreement that provides an additional GBP 2.26bln in loans towards Ukraine’s defence. It was separately reported that Zelensky said he met with Italian PM Meloni to discuss a common plan to end the war.
• UK PM Starmer said Europe needs a security guarantee from the US and that the UK, France and maybe others will work with Ukraine on a plan to stop the fighting which they will then discuss with the US and thinks it is a step in the right direction. Starmer said he would not trust Russian President Putin’s word and he does not think Ukrainian President Zelensky has done anything wrong, while he is clear that US President Trump does want lasting peace and added that there is a moment of real fragility in Europe.
• UK PM Starmer said on Sunday following the Ukraine summit that a new deal will allow Ukraine to use GBP 1.6bln of export finance and this will help protect Ukraine’s critical infrastructure, while he added that they agreed to keep military aid flowing to Ukraine and the economic pressure on Russia. Starmer said in the event of peace, they will boost Ukraine’s defence capabilities and the UK is willing to have boots on the ground and planes in the air regarding peacekeeping troops.
• US National Security Adviser Waltz said it was not clear Ukrainian President Zelensky was ready to negotiate in good faith at the White House and it is absolutely false that the Oval Office meeting was some kind of ambush. Waltz said Zelensky needs to make clear he is ready for peace and the US needs a Ukraine leader who can deal with Washington and Russia and end the war, while he added the US seeks a permanent end to the Ukraine war with European-led security guarantees, according to CNN.
• US Treasury Secretary Bessent said it is impossible to get an economic deal without a peace deal in Ukraine and the plan is for the EU to provide security guarantees for Ukraine not NATO.
• Ukraine’s Foreign Ministry condemned the breach of Ukraine’s territorial sovereignty by IAEA employees who visited the Zaporizhzhia nuclear plant via occupied territory which it said was the result of Russian blackmail.
• Russian Foreign Minister Lavrov said US President Trump is a pragmatist with the slogan common sense and the discussion in Europe about peacekeepers for Ukraine is arrogant. Lavrov said that the US bluntly said it wants to end the conflict in Ukraine but Europe demands the war to continue, while he added the West cannot explain what will happen to the territory of Ukraine and to the Russian language if European peacekeepers are deployed.
• Russia’s Medvedev said Russia is prepared to show flexibility in talks on Ukraine but only in accordance with the Russian constitution and realities on the ground, while he added Russia is ready to discuss a settlement but only with those who are ready to communicate.
• Russian Defence Ministry said Russian forces captured two new villages in eastern Ukraine, while Russian forces also struck gas processing plants in Ukraine, according to IFAX.
• French President Macron said France and Britain propose a one-month truce in Ukraine, according to The Telegraph.
• Germany reportedly discussed setting up special funds for defence and infrastructure, according to sources. It was separately reported that German Chancellor Scholz said they need to financially and militarily support Ukraine. Scholz also said they need a strong army in Ukraine in the future when the war is over and that Thursday’s summit will be about how to do more for their own defences.
• Polish PM Tusk said he supports Italian PM Meloni’s proposal to organise a US-Europe summit, while he sees no other power in the world than the US that can stop Russian aggression. Tusk separately commented that Ukraine summit participants declared they are ready to ramp up defence spending.
• EU’s von der Leyen said that they urgently need to rearm Europe and need to step up massively and have a surge in defence, while she added member states need more fiscal space to do a surge in defence and that they want the US to know that they are ready to defend democracy.
• Canadian PM Trudeau said everything is on the table when asked if he would contribute to a peacekeeping force in Ukraine and said nothing is more important to Canadians right now than standing up for their sovereignty, as well as noted regarding the Trump-Zelensky meeting that he stands with Zelensky.

EU/UK

NOTABLE HEADLINES

• Austrian liberal NEOS party members voted in favour of a coalition agreement which paves the way for a three-party government to take office.
• S&P affirmed France at AA-; Outlook revised to Negative from Stable and upgraded Portugal to A; Outlook Positive.