Chaos hits the markets

Corporate Earning Calendar 10 April - 16 April 2025

Friday: BlackRock, Wells Fargo, Bank of NY Mellon, JPMorgan Chase
Tuesday: Bank of America, Citigroup, Johnson & Johnson, Morgan Stanley, Goldman Sachs
Wednesday: Abbott Laboratories

Global market indices

US Stock Indices Price Performance

Nasdaq 100 -0.69% MTD and -8.89% YTD
Dow Jones Industrial Average -10.37% MTD and -11.51% YTD
NYSE -5.14% MTD and -3.66% YTD
S&P 500 -2.76% MTD and -7.22% YTD

The S&P 500 is -3.77% over the past week, with 10 of the 11 sectors down MTD. The Equally Weighted version of the S&P 500 is -5.65% this week. Its performance is -4.71% MTD and -5.73% YTD.

The S&P 500 Communication Services is the leading sector so far this month, +0.27% MTD and -6.16% YTD, while Energy is the weakest sector at -11.77% MTD and -3.56% YTD.

This week, Information Technology outperformed within the S&P 500 at +4.94%, followed by Communication Services and Consumer Staples at -0.61% and -2.36%, respectively. Conversely, Energy underperformed at -12.33%, followed by Materials and Real Estate at -6.92% and -6.85%, respectively.

On Wednesday, US equity markets experienced a significant surge following the US President’s announcement of a 90-day suspension of certain tariffs for the majority of nations.

This reversal of an escalating global trade dispute prompted a rapid shift in investor sentiment, leading to a substantial market rally. The technology-heavy Nasdaq Composite index surged +12%, its most substantial single-day gain in 24 years. The S&P 500 index was +9.5%, its largest gain since 2008, while the Dow Jones Industrial Average advanced +7.9%, marking its most significant single-day increase since 2020. The Dow's 2,963-point rally represented its largest point gain on record, according to Dow Jones Market Data.

The market's upward trajectory commenced shortly after 1 p.m. in New York, following the President's post on Truth Social, which triggered a rapid ascent across all three major indices.

The positive market sentiment extended into Wednesday night, with stock futures linked to the Dow and S&P 500 exhibiting further gains.

President Trump's reciprocal tariffs, affecting nearly 100 nations, had taken effect just after midnight on Wednesday morning, including a 104% tariff on Chinese imports. On Wednesday, Beijing responded by announcing a tariff hike on US imports to 84%, up from 34%. In his early-afternoon social media post, President Trump also indicated that he had raised the tariff imposed on China to 125%, effective immediately.

Trading volume reached a record high, with over 30 billion shares, valued at $1.5 trillion, changing hands across US stock exchanges, according to Bloomberg data dating back to 2008.

Despite the market's positive reaction, some analysts cautioned against excessive optimism, citing the potential for lasting damage to corporate investment planning and international relations resulting from President Trump's tariff policies. These factors alone could continue to challenge global economic growth.

While the tariff suspension was welcomed, with President Trump taking to his Truth Social site to write, “BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!”, investors were reminded that the situation remains fluid, and market volatility is highly likely to persist. The tariffs on Chinese goods does mean that the overall tariff rate will be higher so the downside risks for growth remain. 

In corporate news, Delta Air Lines withdrew its full-year financial guidance due to uncertainties surrounding global trade, highlighting the widespread impact of President Trump's tariffs on corporate America.

As consumer spending potentially declines due to tariff-related concerns, Walmart is preparing for a potential economic downturn by leveraging its extensive retail network to maintain low prices and expand its market share, as reported by Bloomberg news.

Amazon has reportedly canceled orders for numerous products manufactured in China and other Asian countries, according to a document reviewed by Bloomberg and individuals familiar with the matter, suggesting a strategy to mitigate exposure to US tariffs.

Mega caps: The Magnificent Seven had a mixed performance this week with Nvidia +3.54%, Microsoft +2.19%, Alphabet +1.06%, and Meta Platforms +0.32%, while Amazon -12.50%, Tesla -3.73%, and Apple -11.18%.

Energy stocks had a significantly negative performance this week, with the Energy sector itself -12.33%. WTI and Brent prices are -10.75% and -10.40%, respectively, this week. Over this past week Energy Fuels -0.19%, ConocoPhillips -3.93%, ExxonMobil -10.85%, Marathon Petroleum -11.14%, Chevron -12.28%, Hess -13.78%, Baker Hughes -13.74%, Halliburton -14.12%, Phillips 66 -16.87%, Shell -17.57%, Occidental Petroleum -18.45%, Apa -21.33%, and BP -23.12%.

Materials and Mining stocks had a negative performance this week, with the Materials sector -6.92%. Over the past seven days, Newmont Corporation +0.04%, while Yara International -3.35%, Nucor -6.12%, Mosaic -6.76%, Freeport-McMoRan -11.68%, CF Industries -11.69%, Albemarle -16.30%, and Sibanye Stillwater -17.59%.

European Stock Indices Price Performance

Stoxx 600 -11.99% MTD and -7.43% YTD
DAX -11.25% MTD and -1.20% YTD
CAC 40 -11.91% MTD and -7.01% YTD
IBEX 35 -10.18% MTD and +1.75% YTD
FTSE MIB -13.98% MTD and -4.26% YTD 
FTSE 100 -10.52% MTD and -6.04% YTD

This week, the pan-European Stoxx Europe 600 index is -12.48%. It was -3.50% on Wednesday, closing at 469.89.

So far this month in the STOXX Europe 600, Food & Beverages is the leading sector, -4.76% MTD and +0.44% YTD, while Oil & Gas is the weakest at -19.37% MTD and -11.35% YTD.

This week, Food & Beverages outperformed within the STOXX Europe 600 with -5.06%, followed by Retail and Utilities at -6.22% and -7.35%, respectively. Conversely, Oil & Gas underperformed at -19.13%, followed by Banks and Basic Resources, at -17.19% and -16.37%, respectively.

Germany's DAX index was -3.00% on Wednesday, closing at 19,670.88. It was -12.15% for the week. France's CAC 40 index was -3.34% on Wednesday, closing at 6,863.02. It was -12.67% over the past week.

The UK's FTSE 100 index is -10.79% over the past week to 7,679.48. It was -2.92% on Wednesday.

Following President Trump's announcement on Wednesday of a significant tariff on pharmaceutical imports, within the Stoxx Europe 600, the Health Care sector experienced the largest decline. In response, European pharmaceutical companies cautioned about the potential impact of these tariffs on supply chains and advocated for regulatory changes. 

Real Estate also saw a substantial downturn, driven by a significant selloff in bonds, as the sector is often perceived as a bond proxy. Rate-sensitive Banks were also under selling pressure as markets increased expectations of more aggressive interest rate cuts by the ECB. 

Energy declined due to a drop in crude oil prices, which reached their lowest level in four years amid recession concerns and weakening demand. Attention was drawn to reports that BP and Shell had their licenses revoked in Venezuela. Simultaneously, Eni is reportedly considering the potential sale of its upstream assets, following a recent agreement with Vitol.

Basic Resources also faced pressure, with focus on the weakness in the broader commodity complex after the US President imposed a 104% levy on China. This occurred despite signals from Chinese officials and policymakers indicating further stimulus measures. News also highlighted that Peabody Energy is reviewing options related to Anglo American following a fire at an Australian mine. Autos & Parts declined but relatively outperformed the broader market, as Volkswagen reported a slight increase in its Q1 European vehicle deliveries, capitalizing on the weakness of Tesla.

Other Global Stock Indices Price Performance

MSCI World Index -4.52% MTD and -6.56% YTD
Hang Seng -12.35% MTD and +1.02% YTD

This week, the Hang Seng Index was -12.66% and the MSCI World Index was -5.55%.

Currencies

EUR +1.33% MTD and +5.86% YTD to $1.0959.
GBP -0.71% MTD and +2.57% YTD to $1.2823.

The euro was +1.14% against the USD over the past week, while the British pound was -1.26% against the dollar. The Dollar Index is -0.80% so far this week and -5.14% YTD.

On Wednesday, the US dollar rebounded against safe-haven currencies such as the Japanese yen and the Swiss franc after President Trump announced a 90-day suspension of numerous new “reciprocal” tariffs on trading partners of 10%. The dollar index ultimately was -0.11% on the day to 102.91 as trade tensions with China continued to escalate due to an immediate increase in duties levied on Chinese goods to 125%.

Earlier in the trading session, the dollar had once again weakened after the implementation of the President's 'reciprocal' tariffs on a multitude of countries, including substantial 104% duties on Chinese goods. China responded swiftly, with the imposition of an 84% tariff on US goods, effective from Thursday. Similarly, EU member states approved the bloc's initial countermeasures against the US tariffs on Wednesday.

The effectiveness of recent policy decisions, or at least their planning and execution, appears questionable. While markets are currently reacting positively to the temporary reprieve, the long-term sustainability of this rally remains uncertain.

In Germany, the conservative faction under Friedrich Merz reached a coalition agreement with the center-left Social Democrats on Wednesday, providing support to the euro. The single currency ended the day +0.18% to $1.0959, edging closer to last week's high of $1.1147. On Wednesday José Luis Escrivá, governor of the Bank of Spain and a member of the ECB’s governing council, told the Financial Times that the tariffs were triggering a “very significant negative shock on economic activity” and that they could bring into question the dollar’s status as the international reserve currency. He argued that multilateral agreements and rules that promoted trade flows underpinned the “central role” of “the US economy, the US dollar and US financial markets” in recent decades.

The British pound reached a one-year low against the euro and a new seven-month low against the yen on Wednesday. This decline was attributed to a selloff in US assets that unsettled investors, prompting a flight to safe-haven currencies.

Against the euro, which has benefited from the shift away from the dollar, the pound depreciated by -0.30% to 86.09 pence, after reaching 86.35 pence, its lowest level since 23^rd April.

Investor sentiment also anticipates further interest rate reductions by the BoE, driven by expectations of an impending economic slowdown in the UK.

Current market pricing reflects approximately 82 bps of reductions to the BoE's benchmark rate by December, an increase from approximately 43 bps at the end of March. Markets have also fully priced in a 25 bps rate cut in May.

Sterling strengthened by +0.56% against the dollar, trading at $1.2823.

The US dollar rose by +0.68% against the safe-haven yen to ¥147.41, reversing earlier session losses. It also gained +1.14% against the Swiss franc, reaching 0.8569 franc.

The PBoC has indicated its intention to prevent sharp depreciations of the yuan and has instructed major state-owned banks to reduce their purchases of US dollars.

Note: As of 5:00 pm EDT 9 April 2025

Fixed Income

US 10-year yield +14.6 bps MTD and -22.0 bps YTD to 4.356%.
German 10-year yield -15.8 bps MTD and +22.1 bps YTD to 2.590%.
UK 10-year yield +12.6 bps MTD and +24.7 bps YTD to 4.815%.

On Wednesday, the yield on the 10-year Treasury note partially reversed an earlier increase following a US Treasury Department auction that demonstrated robust demand for the securities and after President Donald Trump announced a temporary cessation of certain tariffs imposed on US trading partners.

The sharp rise in yields observed this week, coupled with reports of substantial bond liquidations, had generated concerns regarding a deterioration in market liquidity.

The Treasury sold the 10-year notes at a high yield of 4.435%, approximately three bps below the pre-sale trading level. The bid-to-cover ratio was 2.67x, representing the highest level since December.

Indirect bidders, which include foreign central banks, accounted for a significantly larger proportion of the auction at 87.9%, potentially mitigating some concerns regarding foreign demand for the debt. However, the two largest foreign holders of Treasuries, Japan and China, both possess direct access to the auctions. Direct bidders acquired only 1.4% of the offering, the lowest proportion in approximately 15 years.

The Treasury is also scheduled to auction $22 billion in 30-year bonds on Thursday.

The yield on the 10-year note concluded the day with an increase of +5.2 bps at 4.356%. Earlier in the session, it reached 4.515%, the highest level since 20^th February. The 10-year yield was up +22.9 bps this week.

Thirty-year bond yields rose by +15.8 bps to 4.893%, reaching an intraday high of 5.023%, the highest point since November 2023. The 30-year yield has increased by +26.6 bps over the past week.

Longer-dated yields have experienced a surge this week as traders exited positions due to forced selling to meet margin requirements, the triggering of stop-loss orders, or profit-taking following a significant rally late last week. There are concerns that the Treasury basis trade, whereby hedge funds wager on the difference between prices of cash, Treasuries and futures, could further destabilise the Treasury market, particularly the longer end. This becomes a concern when there is extreme wider market volatility and investors are forced to rapidly unwind their positions to repay their loans. This means that there is likely to be continued volatility around the 10-year in particular.

The two-year yield, which is more sensitive to interest rate expectations, exhibited greater stability but increased on Wednesday amid expectations that the Fed will implement fewer and less aggressive rate cuts following the US President's tariff pause. It concluded the day up +19.3 bps at 3.931%, having reached an intraday high of 4.039%, the highest level since 27^th March.

The probability for a Fed 25 bps rate reduction at its June meeting on Wednesday was 69.8% according to the CME Group's FedWatch Tool. Traders are currently pricing in 81.0 bps of cuts by the Fed this year, above projections of 73.6 bps last week, and down from Tuesday’s 99.5 bps.

Across the Atlantic, German sovereign bond yields declined on Wednesday, a divergence from the substantial increase observed in US Treasury yields. This contrast arose as the market volatility precipitated by U.S. import tariffs diminished the attractiveness of American assets.

The yield on Germany's 10-year benchmark bond decreased by 3.6 basis points to 2.590%, having earlier risen by over 6.0 basis points to 2.686%.

Initially, assets perceived as safe havens, such as US Treasuries, found support despite the prevailing market turbulence. However, recent trading sessions have witnessed a selloff in these assets, indicative of a pronounced preference for liquidity.

There are indications that the credibility and reliability of the US as both a currency issuer and a trade partner are facing increased scrutiny, a dynamic that is manifesting in the divestment of Treasury securities.

Statements from ECB policymakers regarding President Trump's tariff plan and the impact on global and European markets have varied. 

German Central Bank President Joachim Nagel stated on Tuesday that monetary policy would ‘do its part’ in light of the significant deterioration in global growth prospects, while Olli Rehn, Governor of the Finnish Central Bank, suggested that the ongoing trade dispute strengthens the case for an interest rate reduction this month.

Conversely, other policymakers have emphasised the potential inflationary consequences of the tariffs and the subsequent influence this may exert on monetary policy formulation. Yannis Stournaras, the Governor of Greece’s Central bank, said on Tuesday that “"Any further resurgence in inflation or inflation expectations could delay or even halt the process of monetary policy normalization.” Klaas Knot, President of the Netherlands Central Bank, posited that the imposed tariffs would likely generate a stagflationary effect, leading to increased inflation concurrent with economic stagnation.

Money market participants have adjusted their expectations to fully price in a 25 bps interest rate cut by the ECB at its forthcoming April meeting, an increase from the approximately 85% probability priced in on Tuesday.

Germany's 10-year government bond yields were -3.6 bps at 2.590% on Wednesday, -13.2 bps this week. Germany's two-year bond yield, which is particularly sensitive to anticipated ECB rate expectations, was -29.8 bps this week to 1.732%. On the longer end of the curve, Germany's 30-year yield -7.2 bps this week to 2.962%.

The spread between US 10-year Treasuries and German Bunds is now 176.6 bps, 36.1 bps higher than last week.

Italian bond yields, a benchmark for the eurozone periphery, +6.4 bps this week to 3.885%. Consequently, the yield spread between Italian and German bonds increased 19.6 bps to 129.5 bps from 109.9 bps last week. The spread between French and German 10-year bond yields was 80.4 bps this week, 9.2 bps higher than last week at 71.2 bps.

The UK 10-year yield was +16.8 bps over the past 7 days. On Wednesday 10-year British gilt yields were +19.6 bps to 4.815%. The Bank of England (BoE) has flagged the risk posed by the rising use of leveraged investment strategies in UK government bond markets. As noted by Bloomberg news, according to minutes from meetings held on 4 and 8 April, the BoE’s Financial Policy Committee found that, so far, although hedge funds had been able to meet margin calls, the overall global risk environment has deteriorated. “Uncertainty has intensified,” the committee said. “The probability of adverse events, and the potential severity of their impact, has risen.” Much of that recent increase could be explained by hedge fund net gilt repo borrowing, the BOE said, which rose from £4 billion at the start of 2024 to £61 billion as of March 2025. That’s within the top percentile of the historical distribution of hedge fund net positioning, going back to 2017, it added.

Commodities

Gold spot -1.39% MTD and +16.25% YTD to $3,079.77 per ounce.
Silver spot -10.48% MTD and +5.79% YTD to $30.88 per ounce.
West Texas Intermediate crude -11.58% MTD and -17.67% YTD to $63.13 a barrel.
Brent crude -12.07% MTD and -12.31% YTD to $65.72 a barrel.

Gold prices are -1.74% this week. On Wednesday, gold prices experienced a significant increase, exceeding three percentage points, and was on track for its most substantial single-day gain since October 2023. This movement was primarily driven by inflows seeking safe-haven assets amidst escalating trade tensions between the US and China, following the US President's further imposition of tariffs on Chinese goods.

Spot gold was trading at $3,079.77 per ounce, marking a +3.43% increase. This represented a slight moderation from the near $3,100 peak reached earlier in the session, subsequent to the White House's announcement of a temporary suspension of tariffs for all countries excluding China.

Gold, traditionally regarded as a secure investment during periods of political and financial instability, has appreciated by over $400 in the year 2025. It reached a record high of $3,167.57 on 3^rd April, propelled by robust demand for safe-haven assets and buying activity from central banks. 

This week, WTI and Brent are -10.75% and -10.40%, respectively. 

Crude oil prices experienced a significant surge on Wednesday, climbing by over 6%, and recovering from four-year lows reached earlier in the trading session. The price of Brent crude oil had fallen below $60 a barrel for the first time since February 2021 after the US President indicated a further increase in tariffs against China to 125% from the 104% that went in effect earlier on Wednesday, raising fears about demand in the world’s second-largest oil consumer. This rebound was due to the 90-day suspension of tariffs for the majority of other trading partners.

Brent crude futures settled at $65.72 per barrel, reflecting an increase of $4.00, or +6.48%. WTI crude futures closed at $63.13 per barrel, a gain of $4.77, or +8.17%. Both benchmark contracts had experienced declines of approximately 7% earlier in the session before this reversal occurred.

China announced additional tariffs on US goods, imposing an 84% duty on US products commencing on Thursday.

While the immediate impact on oil demand may be limited, growing concerns regarding a potential weakening of oil demand in the coming months necessitate lower price levels to stimulate supply adjustments and prevent a market surplus.

Countermeasures implemented by Canada, a significant US trading partner, also took effect on Wednesday. EU members agreed Wednesday to impose 25% tariffs on a range of US imports as an initial phase of countermeasures.

The gains in oil prices were partially constrained by a decision last week by the OPEC+ group of producers to increase output in May by 411,000 barrels per day, a move analysts anticipate is likely to push the market into a surplus.

In the US, crude oil stockpiles rose last week as imports increased and exports fell to their lowest since January, while gasoline and distillate inventories drew down. The Energy Information Administration (IEA) reported on Wednesday that commercial crude oil inventories increased by 2.6 million barrels to 442.3 million barrels in the week ended 4 April, above analyst expectations of a 1.4 million-barrel rise. Net U.S. crude imports rose last week by 360,000 barrels per day to just under 3 million bpd as exports fell 637,000 bpd to 3.2 million bpd, the data showed.

The operator of the Keystone oil pipeline system in Canada and the United States issued a force majeure notice on Wednesday following a reported leak in North Dakota, according to media outlets. The pipeline had been shut down on Tuesday after an oil spill near Fort Ransom, North Dakota.

Note: As of 5:00 pm EDT 9 April 2025

Key data to move markets

EUROPE

Friday: German Harmonised Index of Consumer Prices, Spanish Harmonised Index of Consumer Prices, Eurogroup meeting and a speech by ECB President Christine Lagarde.
Saturday: EcoFin Meeting.
Tuesday: French CPI, ECB Bank Lending Survey, German ZEW Economic Sentiment and Current Situation Surveys, Eurozone Industrial Production and Eurozone ZEW Economic Sentiment Survey.
Wednesday: Italian CPI and Eurozone Harmonised Index of Consumer Prices.

UK

Thursday: A speech by Bank of England Deputy Governor for Financial Stability & MPC member Sarah Breeden.
Friday: GDP, Industrial Production and Manufacturing Production.
Saturday: A speech by BoE external member Megan Green.
Monday: BRC Like-for-Like Retail Sales.
Tuesday: Average Earnings, Claimant Count, Employment Change, and ILO Unemployment Rate.
Wednesday: CPI, PPI, and RPI.

US

Thursday: Initial and Continuing Jobless Claims, CPI, Monthly Budget Statement, and speeches by Dallas Fed President Lorie Logan, Fed Governor Michelle Bowman, Chicago Fed President Austan Goolsbee, and Philadelphia Fed President Patrick Harker.
Friday: PPI, Michigan Consumer Expectations Index, Michigan Consumer Sentiment Index, UoM Consumer Inflation Expectations, and speeches by St Louis Fed President Alberto Musalem and New York Fed President John Williams.
Monday: Speeches by Philadelphia Fed President Patrick Harker and Atlanta Fed President Raphael Bostic.
Tuesday: NY Empire State Manufacturing Index.
Wednesday: Retail Sales, Industrial Production, and a speech by Cleveland Fed President Beth Hammack.

CHINA

Thursday: CPI and PPI. 
Monday: Imports, Exports, and Trade Balance.
Wednesday: GDP, Industrial Production and Retail Sales.

JAPAN

Wednesday: Imports, Exports, and Merchandise Trade Balance Total.

Global Macro Updates

March FOMC minutes reflect pre-tariff economic uncertainty. The minutes of the March FOMC meeting offered few unexpected insights, with participants emphasising that the significant level of economic uncertainty necessitates a sustained cautious approach to monetary policy. In light of this elevated uncertainty, all participants concurred that maintaining the current interest rate stance was appropriate.

Participants assessed that inflation was likely to experience upward pressure this year due to the imposition of higher tariffs, although the duration of this impact remained uncertain. Several members noted the potential for elevated prices to be more persistent than initially anticipated. Furthermore, a number of participants highlighted reports from their contacts indicating existing increases in costs, possibly in anticipation of the forthcoming tariffs.

Nearly all participants viewed the risks to the inflation outlook as skewed to the upside, while the risks to the employment outlook were considered to be tilted to the downside. Regarding the Federal Reserve's balance sheet, an overwhelming majority of participants expressed support for decelerating the pace of asset runoff. Finally, the staff's projection for real GDP growth was revised downward from the forecast presented at the previous meeting.

While every effort has been made to verify the accuracy of this information, EXT Ltd. (hereafter known as “EXANTE”) cannot accept any responsibility or liability for reliance by any person on this publication or any of the information, opinions, or conclusions contained in this publication. The findings and views expressed in this publication do not necessarily reflect the views of EXANTE. Any action taken upon the information contained in this publication is strictly at your own risk. EXANTE will not be liable for any loss or damage in connection with this publication.