Asia open: A macro storm is brewing

A macro storm is brewing as a barrage of high-stakes economic data collides with escalating trade tensions, putting markets on edge as February draws to a chaotic close. Asian trading desks are locked and loaded for a volatile session, with traders juggling Tokyo inflation, Japanese retail sales, and industrial production figures before the real fireworks—U.S. PCE inflation—detonates later in the session. Risk appetite is running on fumes, and the next 24 hours could be make-or-break.

The trade war drumbeat is getting louder. In the last 24 hours, Trump has gone full throttle on tariffs, doubling down on a 25% levy against the European Union, reaffirming the March 4 launch of duties on Canada and Mexico (scrapping earlier April 2 ambiguity), and slapping an additional 10% tax on Chinese imports. The market had been clinging to hopes of a softer stance, but what they got was a stark reminder: tariff escalation is the default setting, and Washington isn’t backing down.

The Bank of Japan, meanwhile, unwittingly tapped the brakes on rate hike expectations, with Governor Kazuo Ueda effectively taking some of the air out of near-term tightening bets. Speaking from Cape Town, Ueda underscored the BoJ’s reluctance to act amid global economic uncertainty. The G20 meeting ended in a disjointed mess, with key U.S. officials skipping the event altogether and no formal communiqué emerging—another sign that the global financial order is unravelling. The “chair’s summary” paid lip service to resisting protectionism, but the reality is that Washington is in full-blown trade-war mode.

Tech stocks took another beating as the Nasdaq bled out further. Now down 5% year-to-date, it is severely underperforming both the Dow and S&P 500. The AI darlings that led Wall Street’s charge over the past two years are suddenly looking vulnerable, with macro headwinds shifting sentiment from "unstoppable" to deeply "unsettled." Nvidia’s post-earnings sell-off was a canary in the coal mine, signalling that even top-tier growth names are struggling to find footing in this environment.

And then there’s the bond market—where yields are hugging local lows despite inflation risks, a signal that traders are no longer pricing tariffs as a short-term inflationary jolt but rather as a broader economic drag. The market is recalibrating. The trade war premium isn’t about overheating anymore—it’s about potential stagflation and demand destruction.

Heading into the PCE print, markets are stuck in a no-win scenario. If inflation undershoots expectations, it might barely register with risk assets, as traders are already baking in future inflationary pressures from the next wave of tariffs. A cooler print could give temporary relief, but with trade policy uncertainty looming large, it won’t be enough to shift the broader market mood.

On the flip side, a hot reading is another dagger to rate-cut hopes, reinforcing the Fed’s “higher for longer” stance and keeping financial conditions tight. The inflation dragon isn’t just alive—it’s breathing fire right into the heart of the soft-landing narrative. Either way, risk sentiment remains precarious, with traders navigating an increasingly treacherous macro landscape.

As we head into the final trading session of the month, the market is running on pure nerves. Sentiment is fragile, liquidity is tightening, and traders are bracing for a one-two punch of macro risk and trade-war escalation. Buckle up—March isn’t going to start quietly.

Thought for the day

From a pure trading mindset, the focus should always be on what the market is doing, not why it’s behaving that way. Getting caught up in the narrative is a dangerous game—markets move first, and the explanation comes later. News is a lagging indicator, and by the time a headline hits the wire, it’s already priced in. If you’re trading today’s news, you’re at least 24 hours behind the move.

The reality is, traders aren’t news takers—we’re news makers. Our job isn’t to react but to anticipate, positioning ahead of the crowd rather than chasing the tape. Newspaper narratives are written after the fact, trying to rationalize price action that’s already played out. That’s of little use in real-time trading.

There’s one simple rule in unruly markets: always hedge against the worst-case scenario. When uncertainty is high and volatility is running hot, the only way to stay in the game is to manage risk first and let the market tell its own story. It’s not about being right—it’s about staying liquid long enough to capitalize on the next mispricing.