Futures rise, Dollar up as US shutdown risk eases

NEW YORK: Asian equities retraced early losses and US equity-index futures climbed Friday (March 14) as signs the US will avoid a government shutdown injected a boost to sentiment.

Shares in Japan retraced early losses while those in Australia also climbed higher. Contracts for US equities advanced early Friday as a stopgap funding bill looked set to pass and avoid a US government shutdown. The S&P 500 dropped 1.4 per cent on Thursday to a six-month low, bringing its three-week rout past ten per cent – a correction in trader parlance. The Nasdaq 100, also in a correction, fell 1.9 per cent.

Treasuries were steady Friday after rallying in the prior session during a dash to haven assets that lifted gold rose to a record and supported an index of the dollar.

Hong Kong equity futures climbed more than one per cent after an index of US-listed Chinese stocks largely sidestepped Thursday’s equity market losses, closing only 0.2 per cent lower.

The retreat from risk had lopped US$5 trillion from the US equity benchmark as selloff in megacaps have deepened and rippled across speculative corners from unprofitable tech to the most-shorted shares. The sentiment is a sign of just how much Trump has rattled Wall Street’s once prevalent bull-market faith as uncertainty about tariff wars raise concerns about growth for the US economy.

“In only a few weeks, the broader market has gone from record highs to correction territory,” said Adam Turnquist at LPL Financial. “Tariff uncertainty has captured most of the blame for the selling pressure and is exacerbating economic growth concerns.”

Treasuries rallied Thursday taking four basis points off the US ten-year yield which ended the session at 4.27 per cent while an index of the dollar edged higher, as investors sought haven assets. US wholesale inflation stagnated in February thanks to a sharp decline in trade margins.

In another sign of a trade-war escalation, Trump threatened to enact a 200 per cent tariff on European wine, champagne and other alcoholic beverages. Later Thursday, Trump said he would not repeal tariffs on steel and aluminum that took effect this week, nor back off plans for sweeping reciprocal tariffs on global trading parters set to start as soon as April 2.

Former Treasury Secretary Steven Mnuchin discounted risks of a US recession, and played down the current selloff in equities, advising investors against overreacting to Trump’s aggressive trade tactics.

“We came in with the market being fully priced, so I think a five to ten per cent correction on the S&P or the Nasdaq actually makes sense,” Mnuchin said in a Bloomberg interview Thursday.

In Asia, data set for release includes international reserves for Thailand. Money supply data for China is due any time through march 15. Markets are closed in India.

The Federal Reserve’s Treasury-based recession model flagged year-ahead recession risk a year ago, and may be proven right if tariff uncertainty continues to hamper economic activity, according to Gina Martin Adams and Michael Casper at Bloomberg Intelligence.

Historically, a model reading exceeding 30 per cent has accurately predicted recession one year out. And the current probability is 29.76 per cent.

“The Treasury market is flirting with recession signals, helping amplify the risk-off sentiment in equities, while at the same time sending an alternative message of relative calm with relatively tight credit spreads,” they added.

However, US equities are pricing in a recession risk much bigger than credit markets, leaving room for a positive surprise, JPMorgan Chase & Co. strategists including Nikolaos Panigirtzoglou and Mika Inkinen wrote in a note.

“While there is clearly elevated uncertainty in the near term as the Trump Administration has at least initially prioritised more disruptive polices, the risk is that credit markets are proven right,” they said.

Elsewhere, oil fell with West Texas Intermediate sliding 1.7 per cent to settle below US$67 a barrel, following a 2.2 per cent jump on Wednesday that was its biggest gain in almost two weeks. A US$8 billion exchange-traded fund tracking junk bonds saw one of its biggest losses in 2025. Bitcoin declined Thursday before rebounding early Friday in Asia. – Bloomberg