Take Five: T is for tariffs

Reuters

28-03-2025

March 28 (Reuters) - The coming week will be dominated by U.S. President Donald Trump's plans for reciprocal tariffs, while the latest U.S. jobs data, an Australian central bank meeting and a key euro zone inflation report means there's plenty for markets to consider.
Here's your one-stop shop for the week ahead in world markets from Kevin Buckland in Tokyo, Lewis Krauskopf in New York, Amanda Cooper in Gdansk and Marc Jones and Yoruk Bahceli in London.
1/ TARIFFS FOR ALL
Trump has said April 2, the deadline by which he will unveil a full suite of trade policies, including tariffs, will be known as "Liberation Day."
His sneak-peak of what to expect in the form of a 25% duty on imported vehicles to the United States is another example of the unpredictable way he has communicated trade policy.
That's made for a turbulent trading environment, in which planning for anything from a new factory, to a holiday to managing an investment portfolio has become more complex.
The fear of an across-the-board approach to duties had been mitigated somewhat in recent days by hints from the White House that Trump might take a more targeted approach -- giving the dollar and Wall Street stocks a modest lift.
But the reality is investors are still very much in the dark.
2/ JOBS TEST
Concerns about the health of the U.S. economy will be tested by the latest monthly jobs data.
The April 4 non-farm payrolls report is expected to show employment growth slowed in March to 128,000 from 151,000 in February, according to a Reuters poll.
But such growth may still reassure investors that the economy is not sliding toward a recession. As it stands, Fed funds futures suggest traders bake in at least two interest rate cuts by year-end to shore up the economy.
Investors are also watching to see the extent to which the effort led by Trump ally Elon Musk to slash the federal workforce will become evident in the data.
Under Musk's government efficiency drive, tens of thousands of workers from the 2.3-million strong federal workforce have been fired or agreed to take a buyout.
3/ AS YOU WERE
The first quarter wraps up on Monday and it hasn't been dull, or gone the way that even the most experienced investors had anticipated.
To put it bluntly, everything has been Trumped. Trillions have been wiped off the super-sized tech firms that have dominated world markets for years.
Gold has soared to a record high and the dollar is set for a quarterly fall of almost 4%. European defence stocks have surged as the U.S. has signalled its military support is no longer guaranteed and even China's tech stocks have roared.
Q2 doesn't look like it is going to get any easier either. Just a couple of days in and Trump will be detailing his grand global tariff plan. For investors, the big question is whether it will end up triggering recession.
4/ ECB'S DILEMMA
Euro zone inflation data on Tuesday is the next hurdle for traders trying to gauge whether the European Central Bank cuts rates in April.
Markets have grown more confident in recent days, now pricing in a roughly 80% chance of another cut on April 17 bringing the ECB's key rate to 2.25%, though policymakers look more split than markets.
But further rate cuts this year seem more a matter of timing and further risks to the bloc's growth loom with all eyes on April 2. What's more, fresh tariffs on autos just announced have blurred the European outlook further.
The bigger debate is what happens further out.
Markets are already thinking about what Germany's spending bonanza and Europe's broader push to bolster its defences mean for growth and inflation.
BNP Paribas, for example, already expects the ECB to hike rates next year.
5/ CUT, BUT NOT YET
The Reserve Bank of Australia is moving closer to what would be only its second interest rate cut since 2020. A benign inflation reading and a surprise cooling in the job market have seen to that.
Even so, traders and analysts expect the RBA will forgo any April Fools surprises when it wraps up a meeting on Tuesday and keep interest rates on hold.
After all, the central bank just cut at its last meeting in February, and struck a markedly hawkish tone, warning markets away from assuming more was to come.
The official, quarterly consumer price numbers could still prove crucial on April 30, but investors have grown more confident on a May rate cut, putting the odds at around 70%.