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Concerns over global growth outlook undermine market mood

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Oil tumbles more than 1%

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China's factory activity falls sharply as Trump tariffs

bite

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Dollar set for worst month in over two years

By Rae Wee

SINGAPORE, April 30 (Reuters) - Shares struggled for

direction on Wednesday and oil prices slid as relief over a

potential easing of global trade tensions was upset by a

worsening economic outlook and signs corporates were feeling the

pain from Donald Trump's tariffs.

Nasdaq futures were down 0.67% in Asia, while S&P 500

futures fell 0.5%. EUROSTOXX 50 futures slipped

0.06%.

In China, data showed factory activity contracted at the

fastest pace in 16 months in April, as hefty U.S. tariffs

snapped two months of recovery and kept alive calls for further

stimulus from Beijing.

"The hit from sky-high U.S. tariffs meant the new export

orders index dropped back to its lowest level, COVID-19

disruptions aside, since August 2012," said Zichun Huang, a

China economist at Capital Economics.

"The sharp drop in the PMIs likely overstates the impact of

tariffs due to negative sentiment effects, but it still suggests

that China's economy is coming under pressure as external demand

cools."

The dismal figures hobbled a rise in Chinese shares, with

the CSI300 blue-chip index reversing earlier gains to

last trade 0.07% lower. Hong Kong's Hang Seng Index

ticked up 0.1%.

Despite Trump's move to soften the blow of his auto tariffs

and signs of progress in broader trade negotiations, details

remain scant, with Commerce Secretary Howard Lutnick saying he

had reached one deal with a foreign power.

Adding to the tariff anxiety, investors were also grappling

with deteriorating U.S. data as Trump's hefty tariffs rippled

across businesses and consumers at home.

"We raise the probability of a prolonged economic stagnation

in the coming months, meeting the criteria for a recession, to

50%," said David Kohl, chief economist at Julius Baer.

"The rising probability of economic stagnation in the U.S.

is entirely due to the exogenous forces of an erratic and

restrictive economic policy with arbitrary tariffs, disruptions

to public spending, changing incentives, and an unsustainable

fiscal stance."

Oil prices extended their steep losses from the previous

session on worries about global growth and its impact on demand.

Brent crude futures were down 1.17% to $63.50 a

barrel, having tumbled 2.4% overnight. U.S. crude lost

1.36% to fetch $59.60 per barrel.

Data on Tuesday showed the U.S. trade deficit in goods

widened to a record high in March as businesses stockpiled ahead

of Trump's tariffs, suggesting trade was a large drag on

economic growth in the first quarter. First quarter GDP data is

due later in the day.

U.S. consumer confidence also slumped to a nearly five-year

low in April.

The precarious state of the global economic outlook,

particularly in the United States, left Wall Street futures

struggling to sustain gains made during the cash session

overnight.

MSCI's broadest index of Asia-Pacific shares outside Japan

was up 0.6%.

The Nikkei tacked on 0.32%.

The fallout from Trump's trade war reverberated further

throughout the corporate world as delivery giant UPS

said it would cut 20,000 jobs to lower costs, while General

Motors ( GM ) pulled its outlook and delayed its investor call,

joining a list of companies that have ditched forecasts for 2025

or slashed outlooks.

"You start to see companies...making some statements about

low visibility, the unwillingness or inability to sign long-term

contracts, to make long-term plans - that's a very slippery

slope," said Fabiana Fedeli, M&G's chief investment officer of

equities, multi-asset and sustainability at a media roundtable

on Monday.

DATA DUMP

U.S. growth figures aside, the release of the core PCE price

index - the Fed's preferred measure of inflation - is also due

later on Wednesday, ahead of jobs data at the end of the week.

Payrolls are seen rising 130,000 and inflation is expected

to ease, but there is much more uncertainty about GDP with the

median forecast for a meagre 0.3% annualised growth.

Markets are now pricing in 97 basis points worth of rate

cuts from the Fed by December, up from about 80 bps early last

week.

That has in turn pushed U.S. yields down, with the two-year

Treasury yield hitting a three-week trough of

3.6400%. The benchmark 10-year yield bottomed at

4.1580%, also its lowest since early April.

In the foreign exchange market, the dollar was on track for

its worst monthly performance since November 2022 with a 4.7%

loss, as erratic U.S. trade policies under Trump left the

greenback vulnerable.

On the other hand, the yen - a beneficiary of safe-haven

demand - was set for a monthly gain of more than 5%, the most

since July 2024. Similarly, the euro was headed for

its largest monthly gain in over two years and last bought

$1.1380.

The Aussie last traded 0.5% higher at $0.6415.

Data on Wednesday showed core inflation in Australia slowed

to a three-year low in the first quarter, supporting the case

for another cut in interest rates in coming weeks.

Elsewhere, spot gold fell 0.15% to $3,310.55 an

ounce.