Weekly Top Ten

1. HEM: Fear of Fear Itself

By Phil Rush, Heteronomics

• US surveys indicate a fear of tariffs and DOGE, leading to a negative sentiment.
• Despite these fears, resilient labour markets suggest that concerns may be exaggerated.
• There is an expectation of reversing unnecessary easing in 2026 due to high underlying price and wage inflation.

2. US Tariff Impact Estimates

By Phil Rush, Heteronomics

• New US tariffs ignored any notion of reciprocity, reaching shockingly substantial sizes. However, the UK was relatively fortunate in landing on the 10% minimum rate.
• Repeating 2024’s imports would raise $577bn in tariff revenue, which is worth ~3% of consumption. 70% pass-through to prices would add 2% to the level over 1-2 years.
• Negotiations need to conclude rapidly to avoid these front-loaded price rises. The EU’s likely retaliations would magnify its pain, but the US is the biggest stagflationary loser.

3. Trump’s Reciprocal Tariffs Hit Asia Hard

By Priyanka Kishore, Asia Decoded

• The scale and scope of Trump’s reciprocal tariffs has exceeded our expectations.
• The growth outlook has unambiguously worsened across the board and will dominate inflation in Asia this year.
• We expect Asian policy rates to be reduced by an average of 100 basis points in 2025.

4. Tariff Transition Smoothing

By Phil Rush, Heteronomics

• President Trump’s tariffs embed structural cost pressures, compounding supply chain changes and creating a stagflationary shock central banks cannot offset.
• Potential retaliation risks raising inflation expectations, constraining the extent to which monetary policy can smooth transitional pains through temporary easing.
• We still believe any dovish policy imperative is likely to be short, shallow, and reversed, with central banks forced to remain flexible and focused on shorter horizons again.

5. TRUMP’S TARIFFICATION: The Market’s Willful Ignorance

By David Mudd

• Liberation Day marks the beginning of the Tariffication of the global trading system.  The complex web of supply chains will be forced to detangle itself to find cost efficiencies.
• US companies will try to unpack the many complexities of re-sourcing products to mitigate the inflationary effects of tariffs.  Domestic substitution is not a possibility in the near-term.
• US consumers will begin to see inflationary impacts of Tariffication in the coming weeks.  China announced retaliatory measures that would open the door for other countries to do the same.

6. EA Disinflates March’s Excess

By Phil Rush, Heteronomics

• Euro area inflation slightly undershot consensus expectations in March, consistent with the correlation of surprises and energy prices. Yet it was 7bps above our forecast.
• Services prices drove core inflation down to 2.4%, creating some dovish space. However, the headline outcome reversed last month’s upside to match February forecasts.
• Resilience in the real economy still justifies more cautious easing close to neutral, so we expect graduated cuts to skip April for June, but the risk of an extra cut has risen.

7. The Month Ahead: Key Events in April

By Gaudenz Schneider

• Central Bank Rate Decisions in Australia, India, and South Korea.
• Tariffs: US reciprocal tariffs effective from 2 April; secondary tariffs are now a factor.
• Holidays: Good Friday is an exchange holiday in Hong Kong, Australia, India, and the US. Several other national holidays throughout the region.

8. Investors Have that “Oh Sh#t Moment” – Part 1:  Hong Kong Strategy

By Rikki Malik

• That “Oh sh#t moment” has just struck many investors in US markets
• Within Hong Kong , Tech most at risk as investors take profit
• Our alternative sector selection  has performed both absolutely and in relative terms

9. HEW: Yikes, At Tonto Tariff Hikes

By Phil Rush, Heteronomics

• Severe global tariff increases have significantly impacted market sentiment, leading to lower equity prices and rate expectations. The market’s eagerness to discount ongoing US labour market resilience is considered excessive.
• The new tariff rates are set to take effect in the coming week. Any further trade conflicts could be the main macro news.
• US inflation, UK GDP, and the RBNZ are the conventional highlights, but these data may be disregarded as old news.

10. Asian Equities: India – Brace for Another Leg Down in the Near Term

By Manishi Raychaudhuri, Emmer Capital Partners Limited

• Indian equity’s recent spike overlooks near-term risks – possible cuts in consensus EPS estimates, risks arising from reciprocal tariffs and another bout of likely INR depreciation. Valuations are again expensive.
• Our analysis of sector fundamentals foretells earnings estimate cuts in most sectors. Financials, and to a lesser extent, consumer discretionary could see upgrades. Expanding trade deficit could drive INR decline.
• In the near term we are cautious about India. For country-dedicated investors we recommend increasing exposure to financials (particularly large cap private banks), select consumer discretionary, and defensives like utilities.

1. US Tariffs: No Fooling!

By Alastair Newton, Heteronomics

• The announcement of individual reciprocal tariff rates for US trading patterns on 2 April is a significant event for investors.
• This announcement is part of a drive to re-industrialise America.
• Despite its significance, this could merely represent the initial stages of a prolonged trade war.

2. The Week Ahead – In The Eye of The Storm

By Nomura – The Week Ahead, Nomura – The Week Ahead

• The Fed, Bank of England, and BOJ all left rates unchanged with their own unique perspectives
• Market volatility continues with equities bouncing and the dollar rebounding
• Fed Chair Powell emphasized keeping options open and uncertainty in the economy, with no immediate rate cuts expected

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3. UK: Low CPI As Seasonal Sales Extend

By Phil Rush, Heteronomics

• UK CPI inflation slowed by 15bps to 2.84%, rounding slightly under expectations. The services rate was surprisingly resilient, and January’s upside news broadly persisted.
• Downside news from clothing and core goods prices occurred because January sales extended broadly and unusually. Postponed Spring lines should drive a March rebound.
• Headline inflation outcomes are benign enough not to threaten the BoE’s likely cut in May, but ongoing resilience still makes that the final move in our forecast.

4. UK Fiscal Smoke Over Treading Water

By Phil Rush, Heteronomics

• Attempts to recreate fiscal headroom after slippage rely on implausible and optimistic assumptions. Further tax rises and delayed prudence are likely in the Autumn budget.
• Replacing aid resources with capital defence spending helps loosen fiscal policy inside the budgetary rules. Policy changes are relatively neutral over the next few years.
• Without corrective action, the gross financing requirement path is £18bn a year higher than in the Autumn, and almost £50bn higher than last Spring, burdening gilt issuance.

5. PMI Spring Vibe Shifts

By Phil Rush, Heteronomics

• A resurgence in the US and UK services PMIs seems inconsistent with renewed dovish pricing that assumes activity weakness. Vibes may be throwing surveys beyond reality.
• Labour demand growth seems to be trending close to supply, signalling monetary conditions close to neutral. That is broadly the story across a broad basket of countries.
• We still believe rate pricing is too dovish for the Fed and, to a lesser extent, the BoE. Noisy survey vibes and spurious assumptions of tightness are likely to be misleading.

6. Asian Equities: What if There’s a US Recession?

By Manishi Raychaudhuri, Emmer Capital Partners Limited

• US recession chatter is back. During past recessions, US declined less than Asia. Within Asia, select consumer staples, telecommunication, energy outperformed. Surprisingly, so did Korea and Taiwan tech, HK industrials.
• Asian equity drawdown was driven more by valuation derating than by earnings decline. During every US recession, all Asian currencies depreciated and FIIs sold almost all Asian markets. 
• In the event of a US recession, we think Asia would outperform US. We like attractively valued domestic-focused sectors and stocks, unless a globally linked stock is egregiously undervalued.

7. Market Movers: Key Dates at a Glance (31 March- 6 April)

By Gaudenz Schneider

• Australia: RBA rate decision on 1 April. Expect no change.
• Japan: Nikkei 225 rebalancing effective 31 March at the close.
• US reciprocal tariffs will keep everyone on their toes on 2 April.

8. Asian Equities: India – What Would FIIs and DIIs Buy and Sell?

By Manishi Raychaudhuri, Emmer Capital Partners Limited

• We analyze FIIs’ and DIIs’ buying/selling trend across sectors and their sector-wise stances relative to benchmarks to assess which sectors they would buy or sell in the near term.
• FIIs and DIIs have bought consumer discretionary and healthcare secularly. They recently started buying financials and IT, after prolonged selling.  They’ve also secularly bought industrials, barring the last two quarters.
• We conclude that both FIIs and DIIs shall continue to buy financials, industrials and consumer discretionary. They would also buy healthcare and sell materials, energy, IT and consumer staples.

9. How to Trade the Momentum Reversal

By Cam Hui, Pennock Idea Hub

• Global equity markets saw a sudden reversal in risk appetite out of the Magnificent Seven.
• While risk appetite has recovered in the U.S. equity market and a relief rally will likely continue, the jury is still out on whether the stampede into non-U.S. will continue.
• Reiterate our view that any relief rally is unlikely to be sustainable. Investors may be better served by diversifying their U.S. exposure into non-U.S. equities for the coming market cycle.

10. Abroad and at Home, Asian Politics Set For a Tough Ride Ahead

By Manu Bhaskaran, Centennial Asia Advisors

• Washington’s apparent disengagement from its European partners is troubling Asian governments who are rethinking their own foreign policy and security strategies.
• So far, the region has not been targeted by the US administration. But their persistent trade surpluses and security arrangements expose them to potentially aggressive measures.
• Domestically, political stability has deteriorated in Thailand, the Philippines, and Indonesia, distracting governments from providing effective leadership in a riskier world.