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International Business Times
a day ago
- Business
- International Business Times
Global Stocks Rise Slightly with Rate Cuts and Trade Talks Ahead
Asian markets rose slightly in the week, ending on corporate earnings and optimism for interest rate cuts. The cash market in Japan is closed for a holiday, but Nikkei futures in Chicago are pointing to 42,380, just short of the record high of 42,426 and suggesting more records could come this week. freepik MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3%. China's Blue Chip added 0.5% after the July update. Consumer prices edged slightly higher last month, but factory price indexes "remained deep in deflationary territory." Korea's KOSPI flat after last week's 2.9% rally On the other hand, futures in Europe were similarly higher—EUROSTOXX 50 gained 0.2%, FTSE 100 increased by 0.1%, and Germany's DAX advanced by 0. The U.S. S&P 500 and Nasdaq futures were up a touch, having posted gains on Friday: all three of the major Wall Street indexes made gains, and the Nasdaq scored another record closing high. Key Index Levels Nikkei Futures: 42,380 (+0.3%) – Close to record high MSCI Asia-Pacific ex-Japan: +0.3% CSI 300 (China): +0.5% KOSPI (South Korea): Flat EUROSTOXX 50 Futures: +0.2% FTSE Futures: +0.1% DAX Futures: +0.2% S&P 500 Futures: +0.1% Nasdaq Futures: +0.1% U.S. Inflation Data Could Shape September Rate Cut During the week, the U.S. consumer price index on Tuesday will be in the spotlight for global markets. Core inflation is forecast to increase 0.3% month-on-month, pushing the annual rate up to 3.0%, more than the Federal Reserve's target of 2%. Stronger-than-expected data could challenge market bets on a September interest rate cut, although weaker payrolls have already shifted the Federal Reserve tone towards easing. Bruce Kasman, chief economist at JPMorgan, sees the Fed moving to cut rates beginning in September. He puts the odds of a recession at 40% but said he expects the cuts to be little—about 0.25% each. Markets are betting there's a 90% chance of a cut in September, with at least one more before the year ends. Trade and Geopolitical Tensions Remain in Focus The U.S.-China tariff deadline is due to expire on Tuesday, and while many investors believe they will be added, others think they will be delayed. US President Trump is also set to meet with Russian President Vladimir Putin in Alaska on Friday to address the Russia-Ukraine conflict, though no breakthroughs are expected. There was also a Financial Times report that Nvidia and AMD might hand over 15% of the proceeds from AI chip sales to China to the U.S. government in exchange for export licenses. This is a highly unusual arrangement that has raised questions over its structure and impact on the semiconductor sector. Commodities, Currencies, and Key Market Moves On Monday, the price of gold dropped 0.6%, to $3,378 per ounce, following an erratic week caused by uncertainty about whether the U.S. would impose tariffs on Swiss gold bars. Crude prices weakened after U.S.-Russia sanctions discussions mentioned the possible removal of Russian crude sanctions. Brent Crude fell 0.6% at $66.22, and WTI dropped 0.7% to $63.44. Currency markets were subdued, with the dollar index little changed at 98.066 following a 0.4% drop last week. The euro was 0.2% higher at $1.1670, the yen traded at 147.50 per dollar, and the Australian dollar slipped to $0.6520 as investors turned cautious before an anticipated Reserve Bank of Australia rate cut to 3.60%.
Yahoo
02-07-2025
- Business
- Yahoo
US economy 'on wobbly footing': Why Wall Street strategists are cautious about stock market's recent records
Stocks staged a historic comeback from their April lows, finishing the first half of the year on a high note with the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) securing back-to-back all-time records. A large part of the market's gains has hinged on easing geopolitical tensions and tariff-related deescalations, including the emergence of the so-called TACO trade, an acronym for "Trump Always Chickens Out." The phrase captures a belief among some investors that the president often talks tough on tariffs but rarely follows through. That assumption has helped fuel a tailwind for markets in recent months as traders increasingly bet on last-minute policy pivots. Trade deal frameworks with China and the UK are reportedly now on the table ahead of Trump's self-imposed July 9 deadline. This has led investors to price in a "Goldilocks scenario" for stocks, with sustained earnings growth, little effects from tariffs, and rate cuts from the Federal Reserve. But Wall Street pros are signaling caution as they assess the path forward, which still includes many unknowns. Stocks kicked off the second half with a mixed close on Tuesday, with the S&P 500 pulling back from record highs as the Dow Jones Industrial Average (^DJI) rose. "Just as Goldilocks awoke from her sleep to confront three bears, there are several areas where this optimism is likely to be challenged," JPMorgan's economics and policy team, led by Bruce Kasman, wrote in a recent client note. Kasman cautioned investors not to "get carried away by inflation momentum," warning that tariffs are still set to rise despite ongoing trade negotiations. This will add pressure to a US economy already grappling with softer consumer demand and signs of stalling global factory activity. Read more: How to protect your money during turmoil, stock market volatility "The economy is entering the second half of the year on wobbly footing," Comerica Bank chief economist Bill Adams added. The uncertainty has been exacerbated by mixed economic signals, including a downward revision to first-quarter GDP growth, a slight uptick in PCE inflation, and continued claims reaching their highest level since 2021, indicating some labor market softness. "There are some yellow flags in the economy but no clear red flags yet," Aditya Bhave, senior US economist at Bank of America, said on a call with reporters. "We're at a fork in the road," he said. "If something is going to break, it's going to break soon." But markets have mostly shrugged off those fears in favor of more optimistic indicators. The latest data released on Tuesday, for example, showed job openings unexpectedly rose in May to hit the highest level since November 2024. Additionally, economists have said easing inflation in areas like housing and energy may help offset tariff-related price increases. "If the Fed cuts in the second half of 2025, it is more likely because inflation is lower than expected than because the unemployment rate rises more than expected," Adams said. The timing of Fed rate cuts remains one of the most hotly debated topics heading into the second half of the year as President Trump continues to pressure the central bank to slash interest rates. "We still think cuts in the next two meetings are unlikely,' Morgan Stanley economists wrote in a note this week. It's a reality markets may struggle to accept, with futures pricing in nearly a 100% chance of a cut by September. Instead, Morgan Stanley sees the Fed delivering seven rate cuts in 2026, helped by the expected arrival of a more dovish Fed chair following Jerome Powell's departure early next year. Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments JPMorgan echoed that caution, saying the Fed is unlikely to ease unless private payroll growth dips "well below 100,000" in the next two reports. Bloomberg consensus estimates call for a 110,000 increase in nonfarm payrolls for June and a slight uptick in the unemployment rate to 4.3%. "The risks of this outcome have increased," JPMorgan wrote, "but our forecast for next week's June report — 125,000 jobs added and a 4.3% unemployment rate — should keep the Fed in its current cautious waiting mode." To that point, Powell has consistently emphasized the central bank's ability to remain patient as it assesses the economic fallout from rising tariffs. "The size of the impact with this type of shock that we haven't had probably in close to 100 years is very hard to have certainty on," Claudio Irigoyen, head of global economics at Bank of America, said on a midyear outlook call with reporters on Tuesday. He added that "uncertainty is worse than bad news," explaining that businesses "cannot commit to long-term investment when the rules of the game are not clear." Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at Sign in to access your portfolio
Forbes
06-04-2025
- Business
- Forbes
Stocks Lose $9.6 Trillion — How To Limit The Next Plunge's Pain
NEW YORK - SEPTEMBER 18: Traders work on the floor of the New York Stock Exchange on September 18, ... More 2008 in New York City. The Dow closed up by more than 400 points following a drop of almost 450 points yesterday in the midst of worldwide financial turmoil. (Photo by) U.S. stock market has wiped out $9.6 trillion since Inauguration Day – $5 trillion of which evaporated between April 2 and April 4 which is 'the largest two-day loss on record,' according to MarketWatch. Here are three questions that come to mind and quick answers: The root cause of this rapid loss in stock market value is the expectations-beating magnitude and breadth of Trump's tariffs and the belief that the resulting uncertainty will result in economic contraction and lower stock prices. Here is a 'Five Whys' analysis on which to base this conclusion: The forces pushing stock prices down are likely to prevail over those sending them back up. So, I think stock prices will continued to drop. Bearish analysts warn of a recession and others expect stock prices to fall further. Recession odds are rising abruptly. The probability of a global recession increased from 40% to 60%; gross domestic product will contract 0,3% in the fourth quarter of 2025 and unemployment will rise to 5.3% in 2026, according to a note from JPMorgan's head of economic research Bruce Kasman featured in the Journal. Whether the bears are right depend on whether tariffs – which now average around 22.5%, noted the Journal – stay where they are or go higher due to retaliation from other countries and a U.S. response. High tariffs could increased prices across the board by double-digits -- causing global stagflation and thus sending stocks down further. That's because companies are more likely to fall short of revenue and profit growth targets as they either raise prices to preserve profit margins which will reduce demand or maintain current prices which will squeeze their margins. Another analyst expressed fear of a trade-war escalation, where 'the U.S. doesn't back down, Freedom Capital Markets chief market strategist Jay Woods emailed MarketWatch. 'If we are to punch back, you could have damaging effects to not only the tech sector, but the economy overall. This could throw us into a recession and could end the bull market as we know it," Woods added. If the current economic uncertainty is replaced by optimism and better than expected growth, stock prices will rise. However, to increase the odds of an optimistic outcome, tariffs would need to decline below March's 8.6% rate and Trump stops changing his mind about tariffs every few days. Having held on to my stocks during previous market crashes, I am inclined to see the wisdom of avoiding panic selling. However, I think it may be worth considering whether to place a bet on continued uncertainty. Since Trump took office, the VIX has soared 184%. Since the VIX came into existence in 2004, it has only spiked higher twice: during the peak of the financial crisis of 2008 and at the beginning of the Covid-19 pandemic. What if Trump's tariffs raised fear to levels not seen since 2004? Anticipating this outcome may well be what motivated some prescient traders to bet the Vix would rise a few days after Trump took office, according to my March 5 Forbes post. Their wager would be profitable if the Vix were to top 50. Since March 5, it has risen 89% to $45.31. One way investors could choose to diversify is to buy an exchange traded fund whose value tracks an increase in the VIX – such as ProShares VIX Short-Term Futures ETF (VIXY). Investors may wish to consider the potential benefits, costs, and risks of this strategy. To illustrate, let's assume an investor wanted to bet $100,000 – purchasing 1,333 shares of VIXY at $75/share – on a rise in the VIX from 45 to 80 by June 4, 2025. The worst case scenario is losing all $100,000 if VIXY drops to zero – which is unlikely unless that market suddenly became completely calm. If the market suffers even bigger shocks in the future, the VIX could rise in value. However, often the VIXY spikes on a large injection of fear – but later gives back its gains when that fear recedes. Even in August 2024, when volatility was unusually high, VIXY ended the year in the red. The reason? Markets eventually calmed down 'while that persistent rolling cost ate away at VIXY's net value,' according to TipRanks. However, if Trump keeps raising the bar on market fear, the VIX could rise to $100,and that VIXY holding could be worth $250,000 – yielding a $150,000 profit after subtracting the purchase price. If you don't want to deal with all that risk, make sure you have deep pool of funds outside of stocks – such as a money market fund which is likely to maintain its yield as tariffs boost inflation.
Wall Street Journal
04-04-2025
- Business
- Wall Street Journal
Global Recession More Likely Than Not This Year, JPMorgan Says
A global recession is more likely than not to happen this year, following the Trump administration's tariff broadside. That's the opinion of JPMorgan analysts, who raised their forecast to 60% Thursday, up from 40% before President Trump's announcement sent markets tumbling. The administration's plans will likely amount to a 20 percentage point increase in U.S. tariff rates, the bank said. The last increase that large, in 1968, was followed by recession, economists led by Bruce Kasman said. Analysts said retaliatory tariffs by other countries, weakening business sentiment in the U.S. and supply chain disruptions will make things worse. Jeep maker Stellantis has already halted production at its auto assembly factories in Mexico and Canada.
Yahoo
28-03-2025
- Business
- Yahoo
Will the Stock Market Crash if President Trump's Tariffs Cause a Recession? History Gives a Clear Answer.
The S&P 500 (SNPINDEX: ^GSPC) has declined 7% from its high as the Trump administration has imposed tariffs on goods from several countries. The president has also outlined plans for more aggressive reciprocal tariffs scheduled to take effect on April 2. That shift in U.S. trade policy has rattled Wall Street. In March, J.P. Morgan raised its recession probability forecast to 40%, up from 30% in January. Economist Bruce Kasman said, "We see a materially higher risk of a global recession due to U.S. trade policy." Similarly, 32 fund managers and strategists surveyed by CNBC raised their aggregate forecast to 36% in March, up from 23% in January. History says the S&P 500 would fall much further if the U.S. economy does indeed suffer a recession. Here's what investors should know. Tariffs are typically bad news for the economy and stock market. "They raise prices, slow economic growth, cut profits, increase unemployment, worsen inequality, diminish productivity and increase global tensions," according to David Kelly, Chief Global Strategist at J.P. Morgan. Not surprisingly, forecasts have become increasingly gloomy since the Trump administration began imposing tariffs in February. J.P. Morgan strategists have cut their U.S. gross domestic product (GDP) growth outlook by three-tenths of a point and increased their inflation outlook by two-tenths of a point. Goldman Sachs and Morgan Stanley strategists have made similar revisions to their outlooks. U.S. consumers are also more pessimistic. Consumer spending fell 0.2% in January, the first month-on-month decline in nearly two years. Additionally, consumer sentiment has now worsened in three straight months, and it reached a two-year low in March amid rising uncertainty about U.S. trade policy. Finally, a modeling tool from the Federal Reserve Bank of Atlanta shows U.S. GDP is on pace to decline at an annual rate of 1.8% in the first quarter of 2025. Importantly, that is an early estimate -- an official number will not be published until April 30 -- but the U.S. is currently headed for its first economic contraction in three years and its worst contraction in nearly five years. The S&P 500 is regarded as the best benchmark for the overall U.S. stock market. The index has historically fallen sharply during recessions. The chart below lists each recession since the S&P 500 was created in March 1957. It also shows the peak-to-trough decline in the index during each event. Recession Start Date Peak S&P 500 Decline August 1957 (21%) April 1960 (14%) December 1969 (36%) November 1973 (48%) January 1980 (17%) July 1981 (27%) July 1990 (20%) March 2001 (37%) December 2007 (57%) February 2020 (34%) Average (31%) Data source: Truist Advisory Services. As shown above, the S&P 500 has declined by an average of 31% during past recessions. Past performance is never a guarantee of future results, but we can apply that data to the current situation to make an educated guess about what may happen if tariffs tip the U.S. economy into a recession. Specifically, the S&P 500 earlier this year peaked at 6,144. The benchmark index would fall 31% to 4,239 during a recession if its performance aligned with the historical average. That projection implies 26% downside from its current level of 5,700. Readers may wonder if now is a good time to exit the stock market. The answer is no, and I say that for two reasons. First, tariffs imposed by the Trump administration may be temporary negotiating tools, in which case they would have no lasting impact. "The threat of tariffs can be used as a way to open up foreign markets to U.S. exports and, if they work in this way, no harm is done," according to Kelly. Second, even if U.S. trade policy pushes the economy into a recession, predicting the duration and severity of the stock market decline would be impossible. The S&P 500 in past recessions has usually bottomed about five months before GDP. In other words, the stock market is typically several months into a rebound by the time official economic data shows the recession has ended. Here's the big picture: The near-term outlook for the U.S. stock market is currently clouded by economic uncertainty. However, the S&P 500 has recovered from every past drawdown, so investors should treat the current one as a buying opportunity. That does not mean the stock market will recover anytime soon. But history says investors who patiently hold high-quality stocks will be well rewarded in the long run. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $697,245!* Now, it's worth noting Stock Advisor's total average return is 845% — a market-crushing outperformance compared to 165% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of March 24, 2025 JPMorgan Chase is an advertising partner of Motley Fool Money. Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and JPMorgan Chase. The Motley Fool has a disclosure policy. Will the Stock Market Crash if President Trump's Tariffs Cause a Recession? History Gives a Clear Answer. was originally published by The Motley Fool Sign in to access your portfolio
