What will it take for Trump to pull back on tariffs?

Corporate Earnings Calendar 17 April - 23 April 2025

Thursday: American Express, Blackstone, Taiwan Semiconductor Manufacturing, United Health Group, Netflix, Charles Schwab, State Street, Fifth Third Bancorp, Snap-On.
Monday: W.R. Berkley.
Tuesday: Tesla, Verizon, Intuitive Surgical, Visa, General Electric, Lockheed Martin, Chubb, Danaher, Northrop Grumman, 3M, Capital One Financial, Kimberly-Clark, Baker Hughes, EQT, Synchrony Financial, Packaging Corporation of America, Northern Trust.
Wednesday: AT&T, Boeing, CME Group, GE Aerospace, Thermo Fisher Scientific, Ford Motor, IBM, QuantumScape, ServiceNow, Philip Morris International, Newmont, Keurig Dr Pepper, Boston Scientific, NextEra Energy, Texas Instruments, General Dynamics, Discover Financial Services, United Rentals.

Global market indices

US Stock Indices Price Performance

Nasdaq 100 -5.30% MTD and -13.11% YTD
Dow Jones Industrial Average % MTD and % YTD
NYSE -5.93% MTD and -4.46% YTD
S&P 500 -5.99% MTD and -10.30% YTD

The S&P 500 is -3.32% over the past week, with all of the 11 sectors down MTD. The Equally Weighted version of the S&P 500 is -1.20% this week. Its performance is -5.84% MTD and -6.86% YTD.

The S&P 500 Consumer Staples is the leading sector so far this month, -1.03% MTD and +3.49% YTD, while Energy is the weakest sector at -14.56% MTD and -6.62% YTD.

This week, Utilities outperformed within the S&P 500 at +1.40%, followed by Real Estate and Consumer Staples at +1.39% and +1.25%, respectively. Conversely, Consumer Discretionary underperformed at -6.53%, followed by Communication Services and Information Technology at -5.77% and -5.06%, respectively.

On Wednesday, US equity markets, which had initially experienced a relatively calm trading session, fell following comments from Fed Chair Jerome Powell. These comments strongly suggested that the Fed was focusing on its inflation mandate due to the risks from tariffs and would not be cutting rates immediately in response to a deterioration in the growth outlook, even at the potential expense of risk assets. This declaration triggered a surge in the Cboe Volatility Index, which climbed to 34. 

Both the S&P 500 and the Nasdaq extended their predominantly downward trend from Tuesday's close and remained on track for their third weekly decline in the past four weeks. The technology-heavy Nasdaq Composite index ended the trading day -1.00%, the S&P 500 index was -2.24%, and the Dow Jones Industrial Average was -0.38%. The Nasdaq 100 fell -3.04%.

The equal-weight version of the S&P 500 outperformed its cap-weighted counterpart by nearly 100 bps. 

Nvidia was the largest individual detractor following Monday’s announcement of new US government export restrictions on its H20 chips. Other semiconductor stocks fell further with Dutch chip-equipment maker ASML Holding down -7.1% after it revealed that it doesn’t know how to quantify the impact of tariff announcements. While recent market attention had centred on potential de-escalation of tariff tensions (including last week's pause in reciprocal tariff increases, electronics exemptions, and indications of possible relief for the auto industry), tensions with China have persisted and intensified.

This includes reports suggesting a US strategy of isolating China's economy in exchange for reduced US tariffs, as well as restrictions and sanctions targeting Chinese industries (such as AMD's export licensing requirement, actions against Deepseek, and measures against refiners). Additionally, scheduled trade talks with Japan did not yield any significant announcements.

In corporate news, industry data reported by Reuters indicated that Tesla’s Q1 vehicle registrations in California were down 15%.

Bloomberg News reported that Parkland's CEO, Bob Espey, will resign amid pressure from the company's largest shareholder. 

OpenAI is reportedly in discussions to acquire Windsurf in a transaction valued at approximately $3 billion. 

Ford Motor announced that it may need to raise prices on newly manufactured vehicles starting next month if current tariff conditions do not improve. 

Temu and Shein have reportedly reduced their spending on US advertising platforms, including Meta and YouTube, by an average of 31%.

Mega caps: The Magnificent Seven had a decidedly negative performance this week with Apple -2.30%, Alphabet -3.39%, Microsoft -4.83%, Nvidia -8.61%, Amazon -8.78%, Tesla -11.26%, and Meta Platforms -14.25%.

On Monday Nvidia was barred by President Trump’s administration from selling its H20 chip in China. This led to Nvidia shares falling 6.9% on Wednesday after it warned it will report around $5.5 billion in write-downs during the fiscal quarter due to this ban due to inventory and other commitments.

Energy stocks had a mostly negative performance this week, with the Energy sector itself -6.53%. WTI and Brent prices are -0.84% and +0.29%, respectively, this week. Over this past week Energy Fuels +14.68%, BP +6.40%, and Shell +6.24%, while ExxonMobil -1.52%, Baker Hughes -1.60%, Halliburton -2.90%, Occidental Petroleum -4.42%, Marathon Petroleum -5.59%, ConocoPhillips -5.63%, Phillips 66 -6.36%, Hess -7.26%, Chevron -7.31%, and Apa -8.02%.

Materials and Mining stocks had a mixed performance this week, with the Materials sector -0.43%. Over the past seven days, Sibanye Stillwater +33.37%,Newmont Corporation +14.77%, Mosaic +9.28%, CF Industries +5.11%, and Yara International +4.70%, while Freeport-McMoRan -1.24%, Nucor -5.67%, and Albemarle -13.06%.

European Stock Indices Price Performance

Stoxx 600 -5.03% MTD and -0.10% YTD
DAX  -3.85% MTD and +7.04% YTD
CAC 40 -5.91% MTD and -0.69% YTD
IBEX 35 -1.47% MTD and +11.62% YTD
FTSE MIB -5.80% MTD and +4.85% YTD 
FTSE 100 -3.89% MTD and +0.93% YTD

This week, the pan-European Stoxx Europe 600 index is +7.92%. It was -0.19% on Wednesday, closing at 507.09.

So far this month in the STOXX Europe 600, Retail is the leading sector, +2.97% MTD and -1.91% YTD, while Oil & Gas is the weakest at -13.47% MTD and -4.86% YTD.

This week, Banks outperformed within the STOXX Europe 600, at +12.31%, followed by Construction & Materials and Retail at +9.95% and +9.39%, respectively. Conversely, Personal & Household Goods underperformed at +4.04%, followed by Food & Beverage and Chemicals, at +5.69% and +6.37%, respectively.

Germany's DAX index was +0.27% on Wednesday, closing at 21,311.02. It was +8.34% for the week. France's CAC 40 index was -0.07% on Wednesday, closing at 7,329.97. It was +6.80% over the past week.

The UK's FTSE 100 index was +7.42% over the past week to 8,249.12. It was +1.14% on Wednesday.

On Wednesday, European trading saw defensive sectors leading the way, with Utilities and Telecom companies showing particular strength. The Real Estate sector also performed well, supported by broadly lower bond yields. BNP Paribas issued a sector note suggesting only modest downgrades to European real estate earnings and capital values, noting a limited direct impact from tariffs, but acknowledging risks from weaker economic growth and higher long-term interest rates. 

The Food & Beverage sector also experienced gains. Heineken's Q1 sales demonstrated solid organic growth. Volumes, driven by the Asia-Pacific region, slightly surpassed expectations and are expected to positively impact profits. Conversely, the Technology sector was the main underperformer. ASML's Q1 results were mixed, with attention focused on weaker-than-expected Q1 orders and soft Q2 guidance. 

The Industrial Goods & Services sector also underperformed on Wednesday’s session. Bunzl's Q1 earning statement revealed lower-than-expected net profit and a cut in its 2025 guidance due to execution challenges and deflation in North America. Flughafen Wien reported a 4.1% y/o/y increase in total passenger traffic in March, reaching 2.99 million. Hays' Q1 results were in line with expectations, with like-for-like net fee growth at -9.0%. Edenred's Q1 revenue growth was largely in line with expectations, with organic operating revenue up 7.1%.

Other Global Stock Indices Price Performance

MSCI World Index -4.41% MTD and -6.46% YTD
Hang Seng -8.92% MTD and +4.97% YTD

This week, the Hang Seng Index was +3.91% and the MSCI World Index was +0.11%.

Currencies

EUR +5.40% MTD and +10.07% YTD to $1.1399
GBP +2.58% MTD and +5.79% YTD to $1.3248.

The euro was +4.01% against the USD over the past week, while the British pound was +3.31% against the dollar. The Dollar Index is -3.53% so far this week, -4.71% MTD and -8.51% YTD.

The dollar resumed its decline on Wednesday, as both safe-haven and risk-sensitive currencies outperformed the greenback. The US dollar index was -0.88% Wednesday to 99.27. This movement reflected traders' expectations regarding potential new trade agreements between the US administration and its trading partners. While discussions with some, such as Japan, are ongoing, and meetings with other partners are expected, including a meeting between South Korean Finance Minister Choi Sang-mok and US Treasury Secretary Scott Bessent next week, tensions with others remain or are escalating. Reaching trade agreements with China and the EU is expected to require a more protracted timeline. 

The euro was +1.03% on Wednesday, reaching $1.1399, yet remaining below its three-year high of $1.1473 recorded last Friday. 

The British pound also rose on Wednesday, ending the day +0.17% to $1.3248 after having touched a six-month high of $1.3292 earlier in the session. Against the euro, the pound weakened, with the euro +0.50% to trade at 85.66 pence. 

Data from the Office for National Statistics showed British inflation slowed to an annual rate of 2.6% in March, down from 2.8% in February and below analyst expectations of  2.7%. This was the slowest inflation rate in three months. A measure of services inflation, closely monitored by the BoE, also eased to an annual rate of 4.7% in March, from February's 5.0% reading, also below its expected reading of 4.8%.

Market indicators suggest the BoE will implement three quarter-point interest rate cuts this year, bringing rates down to 3.60% by December, their lowest level since January 2023. 

The dollar was -0.97% against the Japanese yen, trading at ¥141.81 after having reached ¥142.03 earlier in the session, slightly dipping below Friday's low to its weakest exchange rate since 30^th September.

Note: As of 5:00 pm EDT 16 April 2025

Cryptocurrencies

Bitcoin +2.35% MTD and -9.64% YTD to $84,278.10.
Ethereum -13.21% MTD and -52.58% YTD to $1,578.94.

Bitcoin is +1.79% and Ethereum -5.51% over the past 7 days. On Wednesday Bitcoin was +0.29% and Ethereum -1.08%. Bitcoin has recovered a bit over the past week despite tariff uncertainty continuing to cause volatility in equity and bond markets. For some investors, this seems to be reinforcing the perception that Bitcoin, as the largest cryptocurrency, functions as a geopolitical hedge like gold despite it also being a risk asset dependent upon investor adoption. However, this does not mean that Bitcoin is immune from the impact of macroeconomic moves. On Wednesday Bitcoin and other cryptocurrencies fell after Fed Chair Jerome Powell suggested that the Fed will be focusing on price stability. This suggests that investors should temper their expectations for rate cuts this year. 

However, in a surprise to investors, Fed Chair Jerome Powell, speaking to the Economic Club of Chicago, said that there could be a ‘loosening’ of crypto-related rules in banks' future. As noted by Cryptoslate.com, Powell acknowledged that US bank regulators, including the Fed, had taken a conservative approach in issuing guidance on how banks should manage exposure to digital assets. However, he stated that some of this guidance may be relaxed to accommodate responsible innovation, provided consumer protections and financial safety remain intact.

Powell noted a "a wave of failures and fraud" over the past few years, but said that the atmosphere itself is becoming more mainstream. 

Note: As of 5:00 pm EDT 16 April 2025

Fixed Income

US 10-year yield +7.2 bps MTD and -29.4 bps YTD to 4.282%.
German 10-year yield -23.4 bps MTD and +14.5 bps YTD to 2.514%.
UK 10-year yield -8.0 bps MTD and +4.1 bps YTD to 4.609%.

On Wednesday, the yield on the 10-year Treasury note was -5.7 bps to 4.282%. The 10-year yield was -7.4 bps this week. US economic data released on Wednesday revealed an increase in retail sales for March, attributed to increased household spending on motor vehicles ahead of impending tariffs. 

US Treasury yields declined on Wednesday following Fed Chair Jerome Powell's remarks, which raised concerns regarding economic growth and inflationary pressures. Powell indicated that US economic growth appears to be decelerating, characterised by moderate consumer spending and a surge in imports aimed at circumventing tariffs. These factors are likely to negatively impact gross domestic product estimates and overall economic sentiment. Furthermore, Powell emphasised that the tariffs recently announced by the White House exceeded even the most elevated projections previously prepared by the Fed. 

However, despite the past week’s upheavals in bond markets, analysts viewed Wednesday’s $13 billion auction of 20-year bonds as robust, noting a bid-to-cover ratio of 2.63x.

Thirty-year bond yields -4.5 bps to 4.732% on Wednesday. The 30-year yield has -16.1 bps over the past week.

The two-year yield, which is more sensitive to interest rate expectations, ended the day -8.0 bps lower to 3.786%, after falling -14.5 bps this week.

The probability for a Fed 25 bps rate reduction at its June meeting on Wednesday was 68.3% according to the CME Group's FedWatch Tool. Traders are currently pricing in 92.0 bps of cuts by the Fed this year, above projections of 75.0 bps last week.

Across the Atlantic, eurozone government bond yields edged lower on Wednesday as a broader aversion to risk across various asset classes prompted investors to seek the relative safety of European sovereign debt.

Germany's 10-year bond yield fell -2.2 bps to 2.514%, having earlier touched a low of 2.479%, its lowest level in slightly over a week. The German 10-year yield is -7.4 bps this week. Germany's two-year bond yield, which is particularly sensitive to anticipated ECB rate expectations, was +2.0 bps this week to 1.752%. On the longer end of the curve, Germany's 30-year yield -4.8 bps this week to 2.914%.

Money market participants have adjusted their expectations to fully price in a 25 bps interest rate cut by the ECB at its meeting later today. Investor focus is now directed towards policymakers' commentary on tariffs and any guidance they might provide regarding future policy direction due to these tariffs.

Current market expectations suggest the ECB's main interest rate will stand at 1.66% by December, reflecting the pricing of two additional rate cuts this year beyond today’s expected move.

The spread between US 10-year Treasuries and German Bunds is now 176.8 bps, 0.2 bps higher than last week’s 176.6 bps.

Italian bond yields, a benchmark for the eurozone periphery, -19.2 bps this week to 3.693%. Consequently, the yield spread between Italian and German bonds decreased 11.6 bps to 117.9 bps from 129.5 bps last week. The spread between French and German 10-year bond yields is 75.1 bps this week, 5.3 bps lower than last week at 80.4 bps.

UK gilts have been falling in tandem with their US counterparts this week. The UK 10-year yield was -20.6 bps over the past 7 days on a weaker growth outlook due to US tariff. On Wednesday 10-year British gilt yields were -4.9 bps to 4.609%. 

Commodities

Gold spot +7.00% MTD and +27.21% YTD to $3,341.63 per ounce.
Silver spot -5.35% MTD and +12.03% YTD to $32.75 per ounce.
West Texas Intermediate crude -12.32% MTD and -15.32% YTD to $62.60 a barrel.
Brent crude -11.81% MTD and -11.62% YTD to $65.91 a barrel.

Gold prices are +8.50% this week. Fuelled by a weakening dollar and increasing trade friction between the US and China, gold prices continued their record-breaking trajectory on Wednesday, with spot gold +3.48%, reaching a new all-time high of $3,341.63 per ounce. 

Gold's sustained strength is underpinned by a broadly softer dollar, robust central bank buying, and uncertainty surrounding tariff announcements. So far this year, gold is +27.21%. 

This week, WTI and Brent are -0.84% and +0.29%, respectively. 

Oil prices surged by more than 1.5% on Wednesday, reaching a two-week peak, driven by concerns surrounding global supply following Washington's imposition of new sanctions targeting Chinese entities importing Iranian oil and by a weakening dollar. 

Brent crude futures settled $1.02 higher, or +1.57%, at $65.91 per barrel. WTI crude climbed $1.07, or +1.74%, to $62.60 per barrel. According to LSEG data, both benchmarks closed at their highest levels since 3^rd April.

Earlier in Wednesday’s session, prices found support following reports that China was open to engaging in trade discussions with the US, contingent upon the cessation of disparaging remarks from US cabinet members. Additionally, OPEC released updated compensation plans submitted by the eight member nations undertaking voluntary production cuts exceeding those mandated by the Declaration of Cooperation.

However, the US increased pressure on Tehran's oil exports on Wednesday by issuing new sanctions, including measures against a China-based independent refinery. The US President aims to reduce Iranian oil exports to zero. This marked the second instance of a small, independent Chinese refinery being sanctioned by the US administration.

This action coincides with Washington's resumption of negotiations with Tehran regarding its nuclear programme this month. Discussions were held in Oman last weekend and a subsequent round of talks is expected in Rome this weekend.

Conversely, the International Energy Agency reported on Tuesday that global oil demand growth for the current year is projected to be the lowest since 2020, a year marked by demand contraction due to the COVID-19 pandemic.

The prevailing uncertainty surrounding trade tensions has prompted several financial institutions, including UBS, BNP Paribas, and HSBC, to revise their crude oil price forecasts downward.

EIA weekly report: US crude stocks rise, fuel inventories decrease. The EIA reported that crude inventories increased by 515,000 barrels, reaching 442.9 million barrels in the week ending 11^th April. Simultaneously, crude exports surged by 1.8 million barrels per day (bpd) to 5.1 million bpd, marking the highest level in approximately a year, EIA data indicated. These contrasting figures coincided with the EIA posting an adjustment of 722,000 bpd in ‘unaccounted for crude oil,’ a figure used for balancing purposes by the agency. 

Regarding fuel inventories, US gasoline stocks fell 2 million barrels to 234 million barrels during the week. Distillate stockpiles, encompassing diesel and heating oil, also decreased by 1.9 million barrels to 109.2 million barrels, the lowest level since November 2023. 

The EIA further noted that net US crude imports fell by 2.04 million bpd. Additionally, crude stocks at the Cushing, Oklahoma, delivery hub declined by 654,000 barrels last week. Refinery crude runs experienced a slight decrease of 63,000 bpd, leading to a 0.2 percentage point drop in refinery utilisation rates to 86.5%.

Note: As of 5:00 pm EDT 16 April 2025

Key data to move markets

EUROPE

Thursday: German PPI, and ECB Rate on Deposit Facility, Main Refinancing Operations Rate, Monetary Statement, and Press Conference. 
Friday: Markets are closed for the Easter holiday.
Monday: Markets are closed for Easter Monday. German Bundesbank Monthly Report.
Tuesday: Eurozone Consumer Confidence.
Wednesday: French HCOB Manufacturing, Services, and Composite PMIs, German HCOB Manufacturing, Services, and Composite PMIs, and Eurozone HCOB French Manufacturing, Services, and Composite PMIs.

UK

Friday: Markets are closed for the Easter holiday.
Monday: Markets are closed for Easter Monday.
Wednesday: S&P Global/CIPS Manufacturing, Services, and Composite PMIs, and speeches by BoE’s Governor Andrew Bailey, Chief Economist Huw Pill, and Deputy Governor Sarah Breeden.

US

Thursday: Initial and Continuing Jobless Claims, Building Permits, Housing Starts, Philadelphia Fed Manufacturing Survey, and a speech by Fed’s Vice Chair Michael Barr
Friday: Markets are closed for the Easter holiday. Speech by San Francisco Fed President Mary Daly.
Tuesday: A speech by Philadelphia Fed President Patrick Harker.
Wednesday: S&P Global Manufacturing, Services and Composite PMIs, New Home Sales, Fed’s Beige Book, and a speech by Chicago Fed President Austan Goolsbee.

CHINA

Sunday: PBoC Interest Rate Decision.

JAPAN

Thursday: National CPI and Core CPI.

GLOBAL

IMF and World Bank Spring meeting, 21-26 April. 

Global Macro Updates

Fed Chair Powell acknowledges tariffs may have a persistent effect on inflation. In his prepared remarks delivered yesterday at the Economic Club of Chicago, Fed Chair Jerome Powell largely reiterated the observations he presented earlier in April. He emphasised that the magnitude of recently announced tariff increases significantly exceeded expectations, and that these tariffs are likely to exert upward pressure on inflation while simultaneously impeding economic growth. He acknowledged that both survey and market-based measures of near-term inflation expectations have increased, while long-term inflation expectations have remained relatively stable. 

Powell reiterated his view that tariffs may have a persistent influence on inflationary pressures. Avoiding such an outcome will depend on the magnitude of the effects, on how long it takes for them to pass through fully to prices, and on keeping longer-term inflation expectations anchored.

Regarding the state of the economy, he affirmed its generally sound condition, citing increased consumer spending and a low, stable unemployment rate. However, he also drew attention to a marked decline in sentiment as indicated by business and household surveys. He reiterated that the Fed is well-positioned to await greater clarity before contemplating any adjustments to monetary policy.

Powell also acknowledged the possibility of a scenario where the Fed’s dual-mandate goals could be in tension. If that were to occur, the Fed would consider how far the economy is from each goal, and the different time frames over which those respective differences would be anticipated to close.

Powell’s remarks echoed those of Fed Governor Christopher Waller. On Monday he said that the new tariff policy is one of the biggest shocks to affect the US economy in many decades and that "their impact on output and employment could be longer-lasting and an important factor in determining the appropriate stance of monetary policy.” Wednesday’s comments by Chair Powell were also supported by Cleveland Fed President Beth Hammack, who took a similar stance, suggesting the Fed should hold interest rates steady until there’s more clarity on the tariff impact.

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