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A look at the day ahead in European and global markets

By Gregor Stuart Hunter, Asia Finance & Markets Breaking News Correspondent

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Is this the Art of the Deal? U.S. President Donald Trump has warned trade partners not to "play games" by backing out of recently agreed trade deals after the Supreme Court struck down his emergency tariffs.

But some foreign governments just want to know if the terms they originally negotiated are still good. 

U.S. President Donald Trump attends a press briefing at the White House, following the Supreme Court's ruling that Trump had exceeded his authority when he imposed tariffs, in Washington, D.C., U.S., February 20, 2026. REUTERS/Elizabeth Frantz/File Photo 

Trump is expected to "come out swinging" during his annual State of the Union address later on Tuesday after the tariff setback, and may take aim at some of the Supreme Court Justices seated in the chamber.

But governments in Asia have questions. Japan wants to know whether the nation's treatment under a new U.S. tariff regime will be as favourable as an agreement reached between the two sides last year. And Taiwan's government is seeking assurances from the U.S. that the beneficial terms it has already agreed do not change.

Not to be outdone by the trade drama in Washington, China on Tuesday prohibited the export of dual-use items to 20 Japanese entities that it says have military links, aimed at curbing Japan's "remilitarisation".

Markets in Japan and China largely shrugged off the dispute, gaining a boost from lower U.S. tariffs as they reopened after local holidays and caught up on the trade news from Friday. The Nikkei 225 and CSI 300 both tacked on more than 1%.

Elsewhere in Asia, markets stabilised after the selloff on Wall Street on Monday that some analysts attributed to a "doomsday" analysis from Citrini Research released earlier this week which presented a vision of the havoc that AI could wreak on the global economy in the years to come. U.S. S&P 500 e-mini futures recovered, rising 0.3%.

Meanwhile, manufacturers in the AI supply chain propelled benchmarks in Taiwan and South Korea to fresh highs, sending MSCI's broadest index of Asia-Pacific shares outside Japan to a new record. 

In early European trade, pan-region futures were last up 0.3%, German DAX futures gained 0.2% and FTSE futures were down 0.1%.

Graphics are produced by Reuters.

India's trade equation with Washington has shifted again after the U.S. Supreme Court struck down Donald Trump's tariffs last week. The ruling offers New Delhi a breather, but also leaves it facing fresh uncertainty.

Is India in a better position now to negotiate a trade pact more favourable to it? Write to me at ira.dugal@thomsonreuters.com.

And, the central bank's tighter rules for bank financing to proprietary traders and brokers open up a new front in the regulatory battle against India's booming but sometimes unwieldy derivatives market. Scroll down for more on that.  

India's trade ties with Washington have seen several dramatic turns - from early hopes of a quick deal, to a near-50% peak tariff, to a pact lowering duties to 18% in return for reduced Russian oil imports, only for the calculus to be upended by the U.S. Supreme Court ruling.

The court's decision to deem a large swathe of Trump's tariffs as unconstitutional was followed by the U.S. president's move to impose a 15% tariff rate, but that still leaves India in a better position than it was earlier, economists reckon.

Mumbai-based brokerage Emkay Global calculates India's effective tariff rate to now be between 11% to 13%, which it says is in line with Asian peers and lower than that of China.

Brazil, China and India will see the biggest declines in trade-weighted tariffs.

Market reaction to last week's developments has been one of caution.

The NSE Nifty 50 rose 0.5% on Monday, while the Indian rupee was marginally higher.

So far, the negative impact of high U.S. levies on Indian goods has been modest. Exports to the U.S. between September, when tariffs were raised to near 50%, and January, fell by 6.1% on-year, according to data from IDFC First Bank.

But the U.S. court's decision is causing uncertainty on whether India will proceed with the recently agreed-upon deal in its current form, under which tariffs on a wide variety of imports into India are being slashed.

Talks scheduled for this week between representatives of the two countries have been put on hold for now after India delayed sending a trade delegation to Washington, Reuters reported over the weekend. U.S. trade officials, however, said no countries have indicated plans to withdraw from trade deals so far.

Meanwhile, Trump warned in a social media post on Monday that countries that "play games" will face higher tariffs

While Trump's ability to threaten and impose tariffs has been weakened by the court ruling, uncertainty for trade partners and companies remains, Reuters journalist Andrea Shalal wrote in this analysis.

"It (Supreme Court ruling) does not eliminate the policy unpredictability in Trump 2.0," DBS economists wrote in a note.

Analysts are also watching to see if India would now have greater flexibility in choosing where it purchases oil from.

While New Delhi has not commented on Trump's assertion that India will stop oil purchases from Russia, data already shows a sharp drop.

Russia's share of India's oil imports in January fell to the lowest since late 2022, Reuters' Nidhi Verma reported, while Middle Eastern supplies rose. Read that data here.

India has also been in talks with the U.S. for purchase of Venezuelan oil and Reliance Industries has bagged a licence that will allow the refiner to import oil from the South American nation directly.

The discount on Russia's flagship Urals oil blend to global benchmark Brent crude, meantime, is at its steepest since 2022, which could be beneficial for India which has maintained that its energy purchases are dictated by commercial considerations.

India is unlikely to return to its previous stance on Russian oil purchases or backtrack on key terms of the U.S. trade deal framework, Bernstein analysts wrote in a note.

"There are plenty of sections at his (Trump's) disposal - many of which allow country-specific measures," they said.

India's central bank's new rules that prohibit banks from lending for proprietary trading and require 100% collateral for other funding to brokers could cut profit margins in half for large high-frequency trading firms.

This, in turn, could lead to a drop of up to a fifth in derivative trading volumes, Reuters reported.

Read that story here.

The Reserve Bank of India's rules are being seen by analysts as part of a concerted effort to curb the country's booming equity options market, which has attracted retail investors even though many of them have faced losses in these trades.

So far, markets regulator Securities and Exchange Board of India has reduced the number of options contracts available for trade and raised the costs associated with such trades, while the government has raised transaction taxes.

Global private equity investors are chasing investment opportunities in Indian cricket.

From KKR to Blackstone, investors are looking to buy into teams playing in the Indian Premier League, the world's richest cricket league, Reuters' Vibhuti Sharma reported.

Read more on that here.

India's AI Impact summit was marred by organisational lapses, a robot row, and complaints of traffic chaos. 

The six-day event still notched more than $200 billion in investment pledges for AI infrastructure in India, including a $110 billion plan announced by Reliance Industries

This newsletter was edited by Muralikumar Anantharaman, Editor, Global News Desk, in Singapore.