Asian Stocks Face Cautious Start Amid US-Colombia Trade Tensions

Global Markets

Asian stocks are poised for a cautious start as global market exuberance wanes following US President Donald Trump's announcement of sanctions against Colombia. The dollar has edged higher, while US equity futures are retreating after last week's rally.

US-Colombia Trade Sanctions

The sanctions imposed on Colombia over its reluctance to accept US deportation flights have raised concerns about the potential for further trade disputes. This has sparked uncertainty among investors, leading to a paring of gains seen in recent weeks.

Global Market Sentiment

Despite the setbacks, global markets have rebounded since fears of a trade war subsided as Trump refrained from immediate tariffs on Mexico, Canada, and China. However, the threat of punitive measures remains, with analysts cautioning that "it is too early to conclude that we are off the peak-tariff threat."

Currency Markets

The dollar is gaining traction in Asia, while the Mexican peso has slipped. The greenback's rally follows its sharp decline last week, which saw currencies linked to Chinese tariffs, such as the Australian dollar, advance.

Tech Earnings and Fed Decision

The start of the US tech earnings season and the Federal Reserve's decision this week are key events to watch. As for the Fed, economists widely expect interest rates to remain unchanged, highlighting the resilience of the US economy.

Commodities

Oil prices have seen their first weekly decline of the year, following Trump's threats against Russia and demands for OPEC+ to lower crude costs. Coffee prices will be closely monitored as Colombia is the world's third-largest producer.

Key Market Movers

Stocks
* S&P 500 futures: -0.5%
* Hang Seng futures: +0.2%
* S&P/ASX 200 futures: -0.1%

Currencies
* Bloomberg Dollar Spot Index: +0.5%
* Euro: -0.2%
* Japanese Yen: +0.2%

Cryptocurrencies
* Bitcoin: -1%
* Ether: -0.9%

Commodities
* West Texas Intermediate crude: -0.4%
* Spot gold: -0.1%