• US President Trump showed no signs of easing up on his aggressive approach to trade as he threatened an additional 50% tariff on China.
• US President Trump said the US is not looking at pausing tariffs; tariffs could be permanent and there could also be talks.
• APAC stocks were mostly positive as markets regained some composure and bounced back from the recent tariff turmoil.
• European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 1.9% after the cash market closed lower by 4.6% on Monday.
• DXY has reversed some of yesterday's strength, antipodeans lead peers alongside the pick-up in risk sentiment, havens lag.
• Crude futures are higher, gold is back above the 3k mark, fixed income markets are tentative.
• Looking ahead, highlights include French Trade Balance, Speakers including ECB’s de Guindos, Cipollone, BoE’s Lombardelli & Fed’s Daly.

SNAPSHOT

US TRADE

EQUITIES

• US stocks finished mostly lower on what was a volatile session as participants digested tariff-related headlines and with President Trump showing no signs of easing up on his aggressive approach to trade as he threatened an additional 50% tariff on China if they do not remove the 34% tit-for-tat tariff on the US by Tuesday. Nonetheless, some countries are aiming for deals with the US to reduce tariffs, although WH Trade Adviser Navarro warned that non-tariff barriers are the issue, while stocks saw a brief, monumental spike higher and T-notes were slammed after CNBC reported that WH Economic Adviser Hassett said President Trump was mulling a 90% pause on tariffs for all countries except China. However, this was misinterpreted by CNBC and the White House were quick to deny the comment which it called "fake news", to trigger a reversal that saw stocks tumble and T-notes pare some of the earlier losses.
• SPX -0.23% at 5,062, NDX +0.19% at 17,431, DJI -0.91% at 37,666, RUT -0.92% at 1,810
• Click here for a detailed summary.

TRADE/TARIFFS

• US President Trump responded they are not looking at that when asked regarding a pause in tariffs and said Japan needs to open up its country. Trump also stated that tariffs could be permanent and there could also be talks, while he is not worried about tariffs driving trading partners into the hands of China and said the US cannot be taken advantage of any longer. Trump also said the EU has been very tough over the years and repeated it was formed to bring damage to the US, as well as noted that the EU tariff response is not enough. Furthermore, he said trade with the European Union has to be fair and reciprocal, as well as noted the EU will have to buy energy from the US and that they are making tremendous progress with a lot of countries on tariffs,
• US President Trump would veto legislation introduced by Sen. Maria Cantwell and Sen. Chuck Grassley that would limit the President's authority to unilaterally impose tariffs, according to a White House statement seen by Axios.
• US Treasury Secretary Bessent said he has not seen a trade offer from Japan and expects Japan to get priority in negotiations because they came forward early, while he added that maybe 70 countries have approached the US by now on trade and that Japan's non-tariff trade barriers are quite high, according to an FBN interview. Furthermore, Bessent said tariffs depend on negotiations which will be tough and the US will not likely have any trade deals in place by April 9th to avoid the retaliatory tariffs going into place, as well as commented that China has chosen to isolate itself by retaliating and doubling down on previous negative behaviour.
• US Treasury Secretary Bessent flew to Florida Sunday to encourage President Donald Trump to focus his message on negotiating favorable trade deals. Otherwise, Trump would risk the stock market cratering further, according to Politico.
• White House Economic Advisor Miran said would encourage countries to approach Trump with offers to reduce tariffs and that President Trump would welcome countries taking down barriers to US exports. Miran also commented that dollar dominance is a great thing, but it has some side effects that can be problematic, while he couldn’t say if any tariff deals will happen before reciprocal tariffs take effect on April 9th and noted the decision will be up to Trump.
• China's MOFCOM said China strongly opposes 50% additional tariffs and urges resolution of disputes with the US via dialogue, while it said it will fight to the end if the US insists on measures and that China will never accept the "blackmail nature" of the US. Furthermore, China urged the US to immediately rectify its 'wrong practice' and cancel all unilateral tariff measures against China.
• China's People’s Daily article stated China's message to Trump is that China is prepared and tariffs will hurt but the Sky won't fall, while it added Beijing is ready with monetary and fiscal steps and with help for businesses and markets, according to CNBC's Yoon.
• Japan will reportedly send Economy Minister Akazawa to the US for tariff talks with US Treasury Secretary Bessent soon, according to Mainichi. However, Akazawa earlier stated that he was not aware of a report that he would be appointed by PM Ishiba as negotiator for trade talks with the US and has not been approached by PM Ishiba when asked about if he would be appointed as Japan's negotiator with the US on trade.
• Japan's Chief Cabinet Secretary Hayashi says PM Ishiba is considering visiting the US to meet with US President Trump while watching ministers' talks.
• US Secretary of State Rubio discussed US reciprocal tariffs on India and how to make progress towards a fair trade relationship in a call with his Indian counterpart, according to the State Department.
• EU Commission proposed a 25% tariff on US goods to take effect from May 16th, according to Reuters citing a document.
• US tariffs reportedly threaten almost USD 2tln of investment pledges by global companies, according to FT.
• Apple (AAPL) reportedly plans to send more iPhones to the US from India to offset the high cost of China tariffs, according to WSJ citing sources.

NOTABLE HEADLINES

• US President Trump posted on Truth "The Budget Plan just passed by the United States Senate has my Complete and Total Endorsement and Support. All of the elements we need to secure the Border, enact Historic Spending Cuts, and make Tax Cuts PERMANENT, and much more, are strongly covered and represented in the Bill."
• US President Trump's team considers exporter tax credit to offset tariff risks, according to Bloomberg.
• US President Trump's trade advisor Navarro said that the market is finding the bottom now.
• US Department of Homeland Security employees on Monday evening were asked to consider voluntarily resigning, retiring or taking a buyout, according to Bloomberg.
• Fed's Goolsbee (2025 voter) says almost unprecedented situation where hard US economic data looks good, but lots of dust in the air, adds Fed policymakers are hearing anxiety. Anxiety is if tariffs are as big as announced, with counter-tariffs, might send the us back to supply disruptions and high inflation. If the world erupts into a global trade war, likely to see consumers change behavior. If this becomes a global age of trade, and don't actually put big tariffs on each other, it won't have this negative impact. Fed's job is to look at hard data.

APAC TRADE

EQUITIES

• APAC stocks were mostly positive as markets regained some composure and bounced back from the recent tariff turmoil.
• ASX 200 advanced with tech and energy leading the broad-based gains across sectors which helped participants shrug off the weaker-than-previous consumer sentiment and business confidence surveys.
• Nikkei 225 surged at the open and reclaimed the 33,000 level after the recent aggressive selling and with Japan said to get priority in trade talks following a call between Japanese PM Ishiba and US President Trump.
• Hang Seng and Shanghai Comp conformed to the improved risk appetite as Chinese state-owned funds and regulators announced efforts to stabilise markets, although gains were capped after US President Trump threatened an additional 50% tariff on China if it doesn't withdraw its 34% tariff increase against the US by today.
• US equity futures (ES +1.1%, NQ +1.0%) gradually advanced overnight as risk sentiment broadly improved despite lingering tariff concerns.
• European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 1.9% after the cash market closed lower by 4.6% on Monday.

FX

• DXY reversed some of the prior day's firm gains after rallying amid a surge in yields and tariff-related volatility as the focus centred on Trump's latest tariff threat in which he warned to impose an additional 50% tariff effective on April 9th if China doesn't withdraw its 34% reciprocal tariff by today. There were also recent Fed comments although had little market impact with Fed's Goolsbee noting that Fed policymakers are hearing anxiety related to tariffs and Kugler said inflation expectations have moved up.
• EUR/USD clawed back losses after rebounding off support at the 1.0900 level, while tariff-related concerns linger after President Trump repeated criticism against the EU and with the EU Commission proposing 25% counter-tariffs on some US imports.
• GBP/USD nursed some of yesterday's losses and steadily reapproached towards the 1.2800 handle amid light catalysts.
• USD/JPY continued to pull back after failing to sustain the 148.00 level but held on to most of the prior day's spoils after surging on the dollar strength and upside in US yields.
• Antipodeans outperformed owing to the recovery in risk appetite and largely ignored the weaker-than-previous CNY reference rate setting and risks of escalation in the US-China trade war.
• PBoC set USD/CNY mid-point at 7.2038 vs exp. 7.3321 (Prev. 7.1980); weakest fix since September 2023.

FIXED INCOME

• 10yr UST futures were contained after retreating throughout the prior US session alongside a surge in yields and with demand sapped restricted as risk appetite recovered.
• Bund futures remained subdued after yesterday's fluctuations and with EUR 3bln of Bund issuances scheduled later today.
• 10yr JGB futures were pressured amid outperformance in Japanese stocks and after weaker demand at the 30yr JGB auction.

COMMODITIES

• Crude futures were underpinned as global markets regained some composure after the recent panic selling.
• Spot gold continued its rebound from the prior day's lows and retested the psychologically key USD 3,000/oz level.
• Copper futures gained with prices underpinned amid the recovery in risk appetite.

CRYPTO

• Bitcoin advanced overnight and climbed back above the USD 80,000 level.

NOTABLE ASIA-PAC HEADLINES

• PBoC said it will provide lending support to China state fund Huijin if needed and it firmly supports Huijin increasing its holdings in stock market index funds, while Huijin said it will play its role as a market stabiliser and act decisively when needed, as well noted it has healthy balance sheets, ample liquidity and smooth funding channels.
• China’s financial regulator said it will increase the proportion of insurance funds invested in the stock market and raise the upper limit of equity asset allocation ratio, while it will optimise the regulatory policy on the proportion of insurance funds.
• China state holding company China Guoxin said it will buy CNY 80bln of stocks and ETFs. It was also reported that state investment firm China Chengtong will increase holdings in stocks and ETFs to safeguard market stability and will buy CNY 80bln of stocks and ETFs.
• China Electronics Technology Group said it will step up share buybacks to bolster investor confidence.

DATA RECAP

• Australian Westpac Consumer Sentiment (Apr) 90.1 (Prev. 95.9)
• Australian NAB Business Confidence (Mar) -3.0 (Prev. -1.0)
• Australian NAB Business Conditions (Mar) 4.0 (Prev. 4.0)

GEOPOLITICS

MIDDLE EAST

• Israel received Egypt's new proposal, which involves the release of 8 hostages in exchange for a 40- to 70-day ceasefire although a source said it will be difficult to accept the proposal, according to Jerusalem Post.
• Israeli PM Netanyahu said he spoke to US President Trump about Gaza and noted they are working on another deal.
• US President Trump said he is having direct talks with Iran and that doing a deal is preferable, while he added that they will have a very big meeting on Saturday and that the Gaza war will stop in the not-too-distant future. It was separately reported that the US and Iran are planning a meeting in Oman on Saturday, according to NYT.
• Iran's Foreign Minister Araqchi confirmed Iran and the US will meet in Oman on Saturday for indirect high-level talks, while official media reported Iran's Foreign Minister Araqchi and US envoy Witkoff will lead the US-Iran talks in Oman.
• Iran's Nournews said the latest statements by US President Trump regarding holding direct talks with Iran is a complex and designed psychological operation to influence domestic and international public opinion.
• Houthi-affiliated media reported US raids on Hodeidah and Sanaa governorates in Yemen, according to Sky News Arabia.

RUSSIA-UKRAINE

• US President Trump said they are meeting with Russia and Ukraine, and are getting sort of close, while he is not happy with Russia's bombing.