Global markets started the week on a cautious note as early momentum from tariff-related optimism on Wall Street faded. While the Asia-Pacific (APAC) region saw mixed trading sessions, investors kept a close eye on upcoming developments from the U.S. administration regarding additional tariffs and economic forecasts from Europe.

APAC Markets Struggle for Direction

Asian markets experienced an uneven performance, with initial enthusiasm over tariff optimism dissipating. Investors reassessed risk sentiment as global trade tensions remain a focal point, particularly concerning new U.S. tariffs that could impact major industries.

Trump to Unveil Additional Tariffs

U.S. President Donald Trump is expected to announce further tariffs in the coming days, targeting sectors such as autos, lumber, and semiconductors. However, reports suggest that exemptions may be granted to “a lot” of countries, potentially tempering some of the market’s concerns.

European Markets Eye a Lower Open

European equity futures suggest a weaker open, with the Euro Stoxx 50 future down 0.3%, following Monday’s cash market losses of 0.2%. Investors in the region remain cautious as they await further economic data and geopolitical developments.

FX Markets Remain Steady

Currency markets are showing relative stability, with the U.S. Dollar Index (DXY) flat and the EUR/USD pair hovering around the 1.08 level. The Japanese Yen is marginally outperforming, reflecting a risk-off sentiment among investors.

UK’s Growth Forecast Slashed

The UK’s Office for Budget Responsibility (OBR) has sharply reduced its 2025 economic growth forecast. The expected growth rate has been downgraded from 2% to approximately 1%, according to reports from the Financial Times. This revision underscores concerns over the long-term economic outlook amid ongoing fiscal challenges.

Key Events to Watch

Looking ahead, market participants will focus on several crucial economic releases and events:

• Economic Data: German Ifo Business Climate Index, U.S. Richmond Fed Manufacturing Index, Consumer Confidence, Japanese Services Producer Price Index.
• Central Bank Speakers: Fed’s Williams & Kugler.
• Government Debt Supply: Auctions from the Netherlands, UK, Germany, and the U.S.

With a packed economic calendar and looming tariff announcements, global markets are poised for potential volatility. Investors will closely monitor developments to gauge the broader impact on trade, currency movements, and equity performance.