Nasdaq 100 Rebound Falters; Tariffs Dominate Commodity Flows

Also, 30-year T-bond, copper, crude oil and euro futures

1. Nasdaq 100 E-mini futures (/NQ): -0.25% 
2. 30-year T-bond futures (/ZN): -0.32% 
3. Copper futures (/HG): +5.53% 
4. Crude oil futures (/CL): -3.03% 
5. Euro futures (/6E): +1.35% 

Nasdaq futures moderated this morning after a positive purchasing managers' index (PMI) print from S&P Global showed the U.S. services sector expanded to 51, beating the expected 49.7 figure. Still, the rebound was cautious and equity indexes remained lower on the week following earlier losses. Traders see downside risk to economic growth as the United States continues to ramp up tariff threats. Last night’s address to Congress by President Trump did little to calm fears that trade tensions could spiral out of control. The question now is how long the levies will last and what the damage to the global economy will be.  

U.S. equity markets advanced today as fear of an economic slowdown cooled following the latest reading on the services sector released earlier this morning. Nasdaq 100 futures (/NQH5) rose 0.31% in early trading. Still, prices remain near the lowest levels traded since early November as concern over tariffs creates uncertainty in the market. Yesterday, Howard Lutnick, U.S. Commerce Secretary, said he expected an agreement on trade with Canada and Mexico to come as soon as today. Abercrombie & Fitch (ANF) fell over 15% after the clothing brand provided soft forward guidance. Campbell’s (CPB) trimmed about 3% after the company reduced its full-year guidance for earnings. 

Treasuries slipped in early trading, pushing bond yields higher across the curve. The move comes despite strong buying in Treasuries in Europe, as Germany advances a plan to boost spending on defense following the U.S. withdrawal of support for Ukraine. The 30-year T-bond futures (/ZBM5) fell 0.3%, which pushed the underlying yield to 4.551% early today. Bond traders will shift their focus to Friday’s jobs report after the ADP private payroll report showed a gain of 77,000 jobs for February, the smallest increase since July. 

Copper prices (/HGK5) surged over 5% after China signaled more stimulus is likely after setting its economic growth target at 5% for this year. According to Bloomberg, China also raised its deficit target to about 4%, reinforcing the view the country is ready to increase support to its economy. The news is a positive for the industrial metal because China is the largest consumer of copper in the world. For now, the growth targets are overshadowing the concerns of tariffs and a potentially prolonged trade war. 

Concern about growth and uncertainty around tariffs remain a net negative for crude oil prices. Traders expect the trade measures to lower consumption in the economy via slower economic growth. The recent move by OPEC+ to move forward with unleashing more supply in April to the tune of about 130,000 barrels per day is also weighing on crude oil prices (/CLJ5), which were down over 3% in early trading. The Energy Information Administration (EIA) will release weekly inventory data later today. 

Euro futures (/6EH5) surged to the highest levels traded since early November after increasing about 1.5% this morning. Germany plans to create an infrastructure fund to revamp the country’s energy grid. Chancellor-in-waiting Friedrich Merz, along with government partners, announced the plan last night to ease the country’s constitutional borrowing restrictions to free up capital for infrastructure and defense spending. The plan would likely boost growth in Europe at a critical time. 

Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. #@fxwestwater
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