10 hours Ago
Asian equities retraced early losses and US equity-index futures climbed Friday as signs the US will avoid a government shutdown injected a boost to sentiment.Shares in Japan retraced early losses while those in Australia also climbed higher along with indexes in Hong Kong. Futures contracts for US equities advanced early Friday as a stopgap funding bill looked set to pass and avoid a US government shutdown.
The S&P 500 dropped 1.4% on Thursday to a six-month low, bringing its three-week rout past 10% — a correction in trader parlance. The Nasdaq 100, also in a correction, fell 1.
9%.Treasuries were steady Friday after rallying in the prior session during a dash to haven assets that lifted gold rose to a record and supported an index of the dollar, which gained for a third consecutive day.Avoiding the government close down removes an uncertainty for the markets, already nervous about economic growth in the US due to the tariff war of President Donald Trump.
Two months into his presidency, sentiment in Wall Street has turned from optimism to one of nervousness with $5 trillion getting erased in the US equity benchmark with investors paring risk.“A short-term rebound is likely,” said Bo Pei, an analyst at US Tiger Securities. “The reasoning is straightforward: extreme market moves are often followed by reversions.
”Congressional Democrats and Republicans have been engaged in a high-stakes game of chicken over Democrats’ insistence that a spending package include some restraints on Elon Musk’s DOGE’s cost-cutting crusade, with Republicans refusing and daring the opposition party to risk blame for a shutdown. Senate Democratic leader Chuck Schumer dropped his threat to block a Republican spending bill, opening the way to avoid a US government shutdown.Treasuries rallied Thursday taking four basis points off the US 10-year yield which ended the session at 4.
27% while an index of the dollar edged higher, as investors sought haven assets. US wholesale inflation stagnated in February thanks to a sharp decline in trade margins.“It’s a very volatile environment and we expect this to continue in the foreseeable future,” Thomas Taw, head of APAC investment strategy, for BlackRock, said on Bloomberg Television.
He said equity markets “like Europe and to some extent China,” have emerged as compelling opportunities as US shares have fallen from record highs.In another sign of a trade-war escalation, Trump threatened to enact a 200% tariff on European wine, champagne and other alcoholic beverages. Later Thursday, Trump said he would not repeal tariffs on steel and aluminum that took effect this week, nor back off plans for sweeping reciprocal tariffs on global trading partners set to start as soon as April 2.
Former Treasury Secretary Steven Mnuchin discounted risks of a US recession, and played down the current selloff in equities, advising investors against overreacting to Trump’s aggressive trade tactics.“We came in with the market being fully priced, so I think a 5% to 10% correction on the S&P or the Nasdaq actually makes sense,” Mnuchin said in a Bloomberg interview Thursday.US RecessionThe Federal Reserve’s Treasury-based recession model flagged year-ahead recession risk a year ago, and may be proven right if tariff uncertainty continues to hamper economic activity, according to Gina Martin Adams and Michael Casper at Bloomberg Intelligence.
Historically, a model reading exceeding 30% has accurately predicted recession one year out. And the current probability is 29.76%.
“The Treasury market is flirting with recession signals, helping amplify the risk-off sentiment in equities, while at the same time sending an alternative message of relative calm with relatively tight credit spreads,” they added.However, US equities are pricing in a recession risk much bigger than credit markets, leaving room for a positive surprise, JPMorgan Chase & Co. strategists including Nikolaos Panigirtzoglou and Mika Inkinen wrote in a note.
“While there is clearly elevated uncertainty in the near term as the Trump Administration has at least initially prioritized more disruptive polices, the risk is that credit markets are proven right,” they said.Elsewhere, oil fell with West Texas Intermediate sliding 1.7% to settle below $67 a barrel, following a 2.
2% jump on Wednesday that was its biggest gain in almost two weeks. An $8 billion exchange-traded fund tracking junk bonds saw one of its biggest losses in 2025. Bitcoin declined Thursday before rebounding early Friday in Asia.
.
