Global Economy on Edge Amid Trade Turmoil

Market Performance & Trade Developments

President Trump plans to impose 25% tariffs on Mexican crude and 10% on Canadian crude in March, which could cost foreign producers $10B annually and add $22B in costs for consumers.

The administration is also considering fees on Chinese-built ships and requiring more US goods to be transported on American vessels, potentially increasing shipping costs.

US consumer sentiment declined sharply due to inflation concerns tied to these tariffs.

Stock Market Performance

Global markets showed mixed performance, with 11 out of 20 indices declining last week.

Top performers:

• Hang Seng (+3.79%)

• TAIEX (Taiwan) (+2.49%)

• JCI (Indonesia) (+2.48%)

• Worst performers:

• ASX 200 (Australia) (-3.03%)

• Nasdaq (-2.51%)

• Dow Jones (-2.50%)

Glabal Economy: Economic Data & Central Bank Moves

Eurozone business activity stagnated (PMI: 50.2), with weak manufacturing growth.

Japan’s core inflation surged to 3.2%, raising expectations of more rate hikes by the Bank of Japan (BOJ).

Malaysia’s international reserves increased to $117.7B, covering five months of imports.

Malaysia’s exports grew only 0.3%, missing forecasts, while imports surged 6.2%, leading to a 64% YoY drop in the trade surplus.

Foreign Fund Flows in Asia

Foreign investors turned net buyers of Asian equities with an inflow of $172.8M, reversing seven weeks of selling.

Taiwan led with a $1.0B net inflow, despite a 3% drop in January export orders.

Thailand also recorded inflows ($64.1M) but faces economic struggles, with 4Q 2024 GDP growth at just 0.4%.

South Korea saw the largest outflows (-$328.5M) as economic momentum slowed, raising expectations of Bank of Korea rate cuts.

Currency & Commodity Prices

The US dollar weakened against the Malaysian Ringgit, closing at RM4.4183 (-0.39%).

Brent crude rose 0.41% to $74.43 per barrel.

Crude palm oil increased 1.57% to RM4,664 per tonne.

Outlook & Risks

Global markets remain volatile amid trade tensions and economic uncertainties.

US protectionist policies could impact global supply chains and drive inflation higher.

Asian markets show mixed recovery, with Taiwan and Thailand attracting investments, while South Korea and others face continued outflows.

Central banks may adjust monetary policies as inflation and economic slowdown persist. – MIDF

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