S&P Futures Gain With Focus on Key U.S. PPI Data and Big Bank Earnings, China Retaliates Again

Globe and Mail

11-04-2025

June S&P 500 E-Mini futures (ESM25) are trending up +0.69% this morning as investors await crucial U.S. producer inflation data and earnings reports from some of the biggest U.S. banks.
U.S. equity futures initially moved sharply higher, attempting to rebound from yesterday's selloff on Wall Street. Later, stock index futures briefly turned lower after China raised tariffs on all U.S. goods to 125% from 84%, effective April 12th. The move came after the White House clarified on Thursday that, including a 20% levy imposed earlier this year, total tariffs on China now stand at 145%. China stated it would not match any additional tariff hikes from the U.S., but affirmed it would continue to retaliate against perceived U.S. offenses. However, stock index futures erased losses and continued to rise as investors appeared to shrug off the latest escalation in the U.S.-China trade war.
In yesterday's trading session, Wall Street's major indices closed in the red. The Magnificent Seven stocks retreated, with Tesla (TSLA) sliding over -7% and Meta Platforms (META) falling more than -6%. Also, chip stocks slumped, with Microchip Technology (MCHP) plunging over -13% to lead losers in the Nasdaq 100 and ON Semiconductor (ON) dropping more than -11%. In addition, CarMax (KMX) tumbled -17% after the company posted weaker-than-expected FQ4 EPS. On the bullish side, Enact Holdings (ACT) rose more than +4% after S&P Dow Jones Indices announced that the stock would join the S&P SmallCap 600 Index, effective April 16th.
The U.S. Bureau of Labor Statistics report released on Thursday showed that consumer prices slipped -0.1% m/m in March, weaker than expectations of +0.1% m/m. On an annual basis, headline inflation eased to +2.4% in March from +2.8% in February, weaker than expectations of +2.5% and the smallest increase in 6 months. Also, the core CPI, which excludes volatile food and fuel prices, rose +0.1% m/m and +2.8% y/y in March, weaker than expectations of +0.3% m/m and +3.0% y/y. In addition, the number of Americans filing for initial jobless claims in the past week rose +4K to 223K, in line with expectations.
'Healthy drop in inflation or big fall drop in demand?' said Bret Kenwell at eToro. 'While the Fed will want more than one data point to just justify its next rate cut, [yesterday's] CPI numbers are certainly a step in the right direction. Unfortunately, the trade-war rhetoric over the last month has muddied the economic waters. Is inflation moving sustainably lower, or did businesses and consumers pull in the reins as they brace for an economic slowdown?'
Kansas City Fed President Jeff Schmid stated on Thursday that he would prioritize curbing inflation if policymakers are forced to balance their goal of price stability against their mandate for full employment. Also, Dallas Fed President Lorie Logan said, 'To sustainably achieve both of our dual-mandate goals, it will be important to keep any tariff-related price increases from fostering more persistent inflation. For now, I believe the stance of monetary policy is well positioned.' In addition, Chicago Fed President Austan Goolsbee described tariffs as a 'stagflationary shock' that places the central bank's objectives of price stability and full employment in conflict with each other.
U.S. rate futures have priced in a 63.6% chance of no rate change and a 36.4% chance of a 25 basis point rate cut at the next central bank meeting in May.
Meanwhile, the first-quarter corporate earnings season gets underway, with some of the biggest U.S. banks, including JPMorgan Chase (JPM), Wells Fargo (WFC), and Morgan Stanley (MS), slated to report their quarterly results today. BlackRock (BLK) and Fastenal (FAST) are other prominent companies scheduled to deliver their quarterly updates today. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +6.7% increase in quarterly earnings for Q1 compared to the previous year.
On the economic data front, all eyes are focused on the U.S. Producer Price Index, which is set to be released in a couple of hours. Economists, on average, forecast that the U.S. March PPI will come in at +0.2% m/m and +3.3% y/y, compared to the previous figures of unchanged m/m and +3.2% y/y.
The U.S. Core PPI will also be closely monitored today. Economists expect March figures to be +0.3% m/m and +3.6% y/y, compared to February's numbers of -0.1% m/m and +3.4% y/y.
The University of Michigan's U.S. Consumer Sentiment Index will be released today as well. Economists estimate the preliminary April figure will stand at 54.0, compared to 57.0 in March.
In addition, market participants will hear perspectives from St. Louis Fed President Alberto Musalem and New York Fed President John Williams throughout the day.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.407%, up +0.34%.
The Euro Stoxx 50 Index is down -1.41% this morning, reversing earlier gains after China raised stakes in its trade war with the U.S. by imposing additional tariffs on American goods. China said it would impose a 125% levy on U.S. goods, adding that if the U.S. continues to implement additional tariffs, China will disregard them. Technology and financial stocks led the declines on Friday. The benchmark index is on track to post its third weekly decline. Meanwhile, the EU has temporarily suspended its planned retaliatory tariffs for a 90-day period in response to Trump's reciprocal tariff pause, with finance ministers scheduled to meet Friday to consider negotiations with Washington or plan for U.S. tariffs. French President Emmanuel Macron stated that Trump's decision this week to suspend tariffs for 90 days allowed for only a 'fragile pause.' On the economic front, data from the Office for National Statistics released on Friday showed that the British economy expanded more strongly than anticipated in February, but Trump's wave of tariff increases and pauses threatens to hamper further momentum. Separately, final data from the Federal Statistical Office confirmed that Germany's annual inflation rate eased to 2.2% in March from 2.3% in February. In corporate news, Stellantis NV (STLAM.M.DX) slid over -4% after the carmaker reported a 9% year-over-year drop in Q1 vehicle shipments.
U.K.'s GDP, Germany's CPI, and Spain's CPI data were released today.
U.K. February GDP has been reported at +0.5% m/m and +1.4% y/y, stronger than expectations of +0.1% m/m and +0.9% y/y.
The German March CPI came in at +0.3% m/m and +2.2% y/y, in line with expectations.
The Spanish March CPI arrived at +0.1% m/m and +2.3% y/y, in line with expectations.
Asian stock markets today settled mixed. China's Shanghai Composite Index (SHCOMP) closed up +0.45%, and Japan's Nikkei 225 Stock Index (NIK) closed down -2.96%.
China's Shanghai Composite Index reversed earlier losses and closed higher today as optimism over stronger stimulus measures and hopes for an eventual trade deal with the U.S. outweighed Donald Trump's 145% tariffs. Chinese equities opened lower as sentiment was dampened after the White House clarified on Thursday that, including a 20% levy imposed earlier this year, total tariffs on China now stand at 145%. However, expectations for Beijing to unveil new growth support, along with hopes that the world's two largest economies will reach a compromise, pushed the benchmark index higher. Trump stated on Thursday that he believes the first trade deals are 'very close' and expressed optimism that China would eventually come to the table. Meanwhile, domestic chip stocks rallied on Friday after guidance from an industry association raised expectations that tariffs on U.S. chips entering China could speed up localization. The benchmark index ended the week higher. In other news, the People's Bank of China said on Friday that finance and central bank officials from China, Japan, and South Korea met and discussed the impact of U.S. tariffs on the global and regional macroeconomic outlook. In corporate news, Hunan Gold rose over +4% after the miner posted a 73% year-over-year increase in 2024 net profit.
Japan's Nikkei 225 Stock Index closed lower today, tracking overnight losses on Wall Street amid fears that the escalating U.S.-China trade war will dampen global growth. The latest drop came after the White House confirmed that cumulative tariffs on Chinese imports have risen to 145%. Uncertainty also persists regarding the outcome of ongoing negotiations to reduce or avert U.S. President Donald Trump's reciprocal tariffs. Electronics, pharmaceutical, and automobile stocks led the declines on Friday. The benchmark index notched its third consecutive weekly loss. Meanwhile, Japanese companies are set to begin announcing their outlook for this fiscal year starting at the end of this month. Yusuke Sakai, a senior trader at T&D Asset Management, said, 'Equities rise as long as companies grow, but I am afraid that they may not be able to disclose their outlook, and even if they do, it could be conservative. That may push the Nikkei to a new low.' In other news, a Bank of Japan survey released on Friday showed that Japanese households' inflation expectations increased in the three months to March, maintaining pressure on the central bank to raise interest rates further. As many as 86.7% of Japanese households anticipate price increases a year from now, up from 85.7% in the previous December survey. In corporate news, Baycurrent surged over +12% after the consulting company lifted its full-year net profit guidance and announced a share buyback. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +13.02% to 44.36.
Pre-Market U.S. Stock Movers
L3Harris Technologies (LHX) gained over +1% in pre-market trading after Goldman Sachs double-upgraded the stock to Buy from Sell with a price target of $263.
Joby Aviation (JOBY) slid more than -3% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight.
Logitech (LOGI) fell over -2% in pre-market trading after withdrawing its outlook for FY26 'given the continuing uncertainty of the tariff environment.'
Today's U.S. Earnings Spotlight: Friday - April 11th
JPMorgan (JPM), Wells Fargo (WFC), Morgan Stanley (MS), BlackRock (BLK), Bank of NY Mellon (BK), Fastenal (FAST), Children's Place (PLCE), Beam Global (BEEM).