Markets
in Asia were always going to be on edge after the huge slide on Wall
Street on Friday. Equities got a further shove lower as
renewed tariff threats from Trump shook investor confidence and
prompted a sharp reassessment of economic risks. Trump said he plans
to launch his reciprocal tariff push against “all countries,”
reinforcing expectations of a sweeping trade crackdown that could see
levies of up to 20% imposed on nearly all U.S. trading partners.
While the precise scope remains undecided (with two days to go still
undecided … hard to believe), administration insiders say the final
policy will be “big and simple,” likely broader than earlier
plans targeting just top trading partners.

Goldman
Sachs responded by lifting its 12-month U.S. recession probability to
35%, up from 20% previously, citing higher inflation, higher
unemployment, and associated growth-dampening risks of a broad-based
tariff regime. The last time recession odds were this high was during
the aggressive Fed tightening cycle in 2022 and the SVB-related
turmoil of early 2023. We didn’t get recessions those times,
fingers crossed the luck holds out.

In
Asian data, Japan’s industrial production surged at its fastest
pace in nearly a year as manufacturers rushed to fill orders ahead of
expected U.S. tariff hikes. Meanwhile, China’s official PMI showed
manufacturing activity accelerating to a 12-month high in March,
buoyed by strong domestic demand and front-loaded export orders.
Still, Capital Economics noted that overall growth momentum remains
uneven, with continued softness in the services sector (despite the PMI expanding).

In
Australia, an uptick in (a private survey of) monthly inflation data reversed February’s
softness, tempering market hopes that price pressures might soon fall
comfortably back within the RBA’s target band. The data may prompt RBA policymakers to remain cautious about further easing. The Bank makes
its interest rate decision Tuesday Australia time, with markets
almost unanimously expecting an on hold decision.

Elsewhere,
a new report from The
Information
revealed that some tech firms are beginning to scale back AI spending
sharply, citing cost efficiencies from platforms like DeepSeek,
adding a fresh wrinkle to the AI investment narrative.

In
FX markets yen was a notable mover, with USD/JPY dropping under 149.00
again. Safe haven demand in the face of geopolitical stress alongside
tariff chaos, and lower US yields contributing. Speaking of a safe
haven, gold rocketed even higher, to a record high above US$3110.

EUR,
GBP were both up a little while AUD and NZD are more or less flat.

Equities
were hit: