A look at the day ahead in Asian and global markets

By Jamie McGeever, Columnist, Global Finance & Markets

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Is the U.S. economy beginning to roll over?

The culmination of recent data misses, escalating trade tensions and powerful asset price swings suggests investors may be beginning to contemplate such a scenario. Even Treasury Secretary Scott Bessent on Tuesday warned that the economy may be more "brittle" under the surface than headline numbers show.

If so, Asian and emerging markets are in for a rocky ride, no matter how their domestic economies are performing. The widespread stock market decline in these countries on Tuesday - MSCI's Asia ex-Japan and emerging indexes, Chinese and Japanese benchmarks all fell more than 1% - points in this direction.

Figures from the U.S. on Tuesday showed that consumer confidence in February slumped the most in three and a half years while inflation expectations surged, the latest in a string of indicators lately - including retail sales and business activity indices - that have raised red flags.

People shop at Macy’s department store in Manhattan in New York City, U.S., February 25, 2025. REUTERS/Jeenah Moon

The two-year Treasury yield hit its lowest level since before November's U.S. presidential election and the 10-year yield fell almost 10 basis points. Rates futures markets are now pricing in at least another two quarter-point Fed cuts this year, starting in July.

Lower Treasury yields and a weaker dollar are often springboards for Asian and emerging markets, but not when they're being depressed by fears that growth is flagging and more analysts are advising clients to trim their risk exposure. 

Wall Street ended mixed on Tuesday, with the Nasdaq sinking more than 1% as the 'Magnificent Seven' stocks - the undisputed market kings over the last two years - fell sharply again.

The 'Mag 7' are now down 13% from their December peak, putting them into 'correction' territory. It's worth noting that they were in bear market territory last summer, plunging more than 20% in barely a month, so they have shown remarkable powers of resilience.

Can they recover, and lift the rest of the market, again? Perhaps, but Nvidia's earnings after the market close on Wednesday will be crucial.

Most assets other than bonds and a few notable currencies fell on Tuesday as investors cashed in on even their winning bets. Gold, traditionally a safe-haven play, fell 1.5% while bitcoin shed 6% and oil fell 3%.

The calendar in Asia on Wednesday includes GDP from Taiwan, Australian inflation, industrial production from Singapore, and an interest rate decision from Thailand. 

The Bank of Thailand is expected to keep its key interest rate on hold at 2.25% and cut only once this year to preserve a policy buffer amid growing global uncertainties, according to a Reuters poll. Swaps markets are pricing in 50 bps of cuts this year.

Graphics are produced by Reuters.