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Reuters
21-05-2025
- Business
- Reuters
Morning Bid: Bad week for bonds
LONDON, May 21 (Reuters) - What matters in U.S. and global markets today By Mike Dolan, opens new tab, Editor-At-Large, Financial Industry and Financial Markets In an already bad week for long bonds, an aggravated inflation picture around the world has added another irritant. I discuss this and all the market news below. Be sure to check out my column today, where I explore why key foreign creditors might be reassessing their holdings of U.S. debt and what this could mean for funding America's rising deficit. Today's Market Minute * President Donald Trump's tax cut and spending bill faces a critical stress test on Wednesday as Republicans try to overcome internal divisions about cuts to the Medicaid health program and tax breaks in high-cost coastal states. * Companies importing goods into the United States from China are rushing to convert warehouses into facilities that are exempt from President Donald Trump's tariffs until they are ready to sell the merchandise. * Oil prices gained more than 1% on Wednesday after reports of Israel preparing a strike on Iranian nuclear facilities raised fears that a conflict could upset supply availability in the key Middle East producing region. * Britain suffered a bigger-than-expected inflation surge in April, including in areas watched closely by the Bank of England which investors now believe will have to slow its already gradual pace of interest rate cuts. * Morgan Stanley upgraded its stance on U.S. equities to "overweight", citing a slowing but still expanding global economy despite policy uncertainty. * Japanese exports rose 2% in April from a year earlier but shipments to the U.S. fell 1.8%, data from the Ministry of Finance showed on Wednesday. * Global electricity generation from solar farms is set to exceed output from nuclear reactors for the first time this summer, marking an important milestone in the continuing growth of solar power within global energy systems. Bad week for bonds Britain and Canada reported above-forecast core inflation jumps for April over the past 24 hours - cutting across interest rate easing expectations in both countries and sending long-term government borrowing costs , higher for both. On top of that, the crude oil prices jumped more than 1% on Wednesday and briefly clocked their highest in a month after CNN reported Israel was preparing to strike Iran's nuclear facilities. The darker global inflation picture comes as U.S. Federal Reserve officials remain wary of tariff-related price hikes in America. Atlanta Fed chief Raphael Bostic said U.S. businesses may have run out of strategies to delay changing prices or employment in response to higher import taxes and the economy could soon face a wave of price increases. "If these pre-tariff strategies have run their course, we're about to see some changes in prices, and then we're going to learn how consumers are going to respond to that," said Bostic. Another Fed interest rate cut is now not fully priced into futures markets until October. This latest bout of inflation anxiety comes at a nervy moment in bond markets, with Japan's ultra-long government bond yields spiking sharply this week after a poor debt auction there. The U.S. Treasury is now due to sell some $16 billion of 20-year bonds later on Wednesday on the heels of Moody's decision last Friday to remove the last U.S. AAA credit rating. Both 20 and 30-year Treasury yields , are back above 5% and stalking their highest levels since 2023. With long-term bond markets on edge, the bumpy passage of President Donald Trump's fiscal plan doesn't help. Trump's tax cut and spending bill faces a critical stress test on Wednesday as Republicans in the House of Representatives try to overcome internal divisions about cuts to the Medicaid health program and tax breaks in high-cost coastal states. The gate-keeping House Rules Committee scheduled an unusual overnight hearing expected to run well into daylight hours. The bill would extend the 2017 tax cuts that were Trump's signature first-term legislative achievement, and also add tax breaks on income from tips and overtime pay that were part of his election campaign trail. Nonpartisan analysts say it could add $3 trillion-$5 trillion to the federal government's $36.2 trillion debt pile. If it clears the committee, House Speaker Mike Johnson could push for a vote on the House floor as soon as Wednesday - with Republicans holding a narrow 220-213 seat majority. U.S. stock futures were down again ahead of today's open, after the S&P 500 closed 0.4% in the red on Tuesday. The dollar (.DXY), opens new tab fell again too, with traders keeping one eye on the G7 finance chiefs meeting in Canada this week for any signs of U.S. pressure for a weaker dollar as part of its bilateral trade negotiations. Britain's pound was the big gainer - hitting its highest since February 2022 against the dollar after the hot UK inflation report. In today's column, opens new tab, I discuss the recent turbulence in Japan's bond market and how it signals a potential change in appetite from Japanese investors that could have significant implications for U.S. government debt. Chart of the day President Donald Trump's approval rating ticked lower this week to just 42% - matching the lowest level of his new term as Americans overall took a dim view of his handling of the economy. While low by historical standards, Trump's popularity remains higher than it was for much of his first term as president and also higher than his Democrat predecessor Joe Biden enjoyed in the second half of his 2021-2025 presidency. The partisan split among those polled also remains extreme. But on his economic policy performance overall, the Reuters/IPSOS poll shows more than 50% disapprove - 12% of those identifying as Republican voters and 94% those voting Democrat gave the thumbs down. Of those with no voting preference, almost 60% disapproved of the economic record so far. One-in-five Republicans disapproved on the cost of living record. Today's events to watch * Canada April house prices (0830EDT) * U.S. Treasury sells $16 billion of 20-year bonds * G7 finance ministers and central bankers meet in Banff in Alberta, Canada * Richmond Federal Reserve President Thomas Barkin speaks; European Central Bank Vice President Luis de Guindos and ECB chief economist Philip Lane speak * U.S. corporate earnings: Target, Lowe's, TJX, Medtronic, Progressive Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
Reuters
07-05-2025
- Business
- Reuters
Morning Bid: Trade talks at last
LONDON, May 7 (Reuters) - What matters in U.S. and global markets today By Mike Dolan, opens new tab, Editor-At-Large, Financial Industry and Financial Markets here. Wall Street's latest stutter seems to have been cut short, as stock futures welcomed the announcement of upcoming U.S.-China trade talks and a fresh bout of monetary easing from the People's Bank of China to boot. In today's column, I discuss what the Trump administration's use of "strategic uncertainty" means for the dollar. Now, onto all of this morning's market news. Today's Market Minute * India attacked Pakistan and Pakistani Kashmir on Wednesday, and Pakistan said it shot down five Indian fighter jets in the worst fighting in more than two decades between the nuclear-armed enemies. Indian shares were lower on Wednesday morning, but had pared their early losses. * U.S. Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China's economic tsar He Lifeng in Switzerland this weekend for talks that could be the first step toward resolving a trade war disrupting the global economy. * Chinese authorities announced on Wednesday a raft of stimulus measures, including interest rate cuts and a major liquidity injection, as Beijing steps up efforts to soften the economic damage caused by the trade war with the United States. * The moves in Asian FX markets in recent days have brought a regional conundrum into sharp focus: how much appreciation can Asian currencies countenance in the face of U.S. President Donald Trump's global trade war? Read the analysis from Reuters' columnist Jamie McGeever. * Amid all the headlines around the U.S. minerals deal with Ukraine, Washington has pursued a potentially even more significant critical metals deal in the Great Lakes region of Africa. Read the analysis from Reuters' columnist Andy Home. Trade talks at last Global stock markets held steady for the most part on Wednesday, as oil prices rose and gold prices fell following signs of a potential de-escalation in the U.S.-China trade spat. U.S. and Chinese officials on Tuesday said Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China's top economic official He Lifeng in Switzerland this weekend. Investors appear to remain cautious about prospects for any breakthrough in tariff negotiations, though. The dollar was down for a fourth session and European stocks dropped. Meanwhile, China announced various stimulus measures on Wednesday, including rate cuts, more cash for the banking system and the expansion of a channel that helps insurance money flow into stocks. But the big story remains what will happen with U.S.-China talks this weekend. All eyes will now turn to the Federal Reserve, which will release its latest policy decision today. Its assessment of the still-uncertain trade and inflation picture will be watched closely, even though almost no one expects any move in interest rates on Wednesday. Over in Europe, jitters eased and the euro held steady after German conservative leader Friedrich Merz was elected chancellor in a second round of voting on Tuesday, after he failed to secure a majority in the first attempt. Geopolitical developments in Asia are jarring somewhat, as India's military strikes on neighbouring Pakistan have increased regional tensions. India's rupee fell slightly and stocks in Pakistan slumped after the heaviest fighting in decades erupted between the nuclear-armed neighbours. Check out my column today, where I turn to the U.S. where the Trump Administration's policy of 'strategic ambiguity' appears to be having the desired affect on investors. Chart of the day China's central bank announced on Wednesday that it will lower the borrowing cost of its seven-day reverse repurchase agreements, its benchmark interest rate, by 10 basis points (bps) to 1.40%, effective May 8. Other interest rates will drop in line with the key rate. These announcements came shortly after U.S. and Chinese officials said the countries will meet in Switzerland this weekend for talks. The Chinese economy is already feeling the pain from the triple-digit U.S. levies, with data last week showing factory activity contracting in April at the fastest pace in 16 months. Concerns have been rising over the impact the tariffs would have on the job market and on the already-strong deflationary pressures in China as exporters lose their biggest customer. Today's events to watch * U.S. Federal Reserve's Federal Open Market Committee policy decision and press conference from Fed Chair Jerome Powell * U.S. March consumer credit * German Chancellor Friedrich Merz meets French President Emmanuel Macron in Paris * Chinese President Xi Jinping visits Moscow * Bank of England Deputy Governor Sarah Breeden speaks * US corporate earnings: Walt Disney, Uber, Paycom, DoorDash, Skyworks, Atmos, Corteva, Axon, Emerson Electric, Verisk, Fortinet, Bunge, CF, Charles River, Rockwell, Bio-Techne Texas Pacific Land, Marketaxess, Cencora, Vistra, Dayforce, Trimble Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias. By Mike Dolan; Editing by Anna Szymanski Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
Reuters
02-05-2025
- Business
- Reuters
Morning Bid: Buy in May?
LONDON, May 2 (Reuters) - What matters in U.S. and global markets today By Mike Dolan, opens new tab, Editor-At-Large, Financial Industry and Financial Markets The Reuters Tariff Watch newsletter is your daily guide to the latest global trade and tariff news. Sign up here. It's Friday, so today I'll provide a quick overview of what's happening in global markets and then offer you some weekend reading suggestions away from the headlines. Today's Market Minute * Beijing is "evaluating" an offer from Washington to hold talks over U.S. President Donald Trump's 145% tariffs, although it warned the United States not to engage in "extortion and coercion." * Japan could use its $1 trillion-plus holdings of U.S. Treasuries as a card in trade talks with Washington, raising explicitly for the first time its leverage as a massive creditor to the United States. * Apple CEO Tim Cook told analysts on Thursday that tariffs could add about $900 million in costs this quarter as the iPhone maker shifts its vast supply chain to minimize the impact of the trade war. * The Trump administration ended U.S. duty-free access for low-value shipments from China and Hong Kong on Friday, removing the "de minimis" exemptions availed of by Shein, Temu and other e-commerce firms as well as traffickers of fentanyl and other illicit goods. * A Reuters review of almost 100 Chinese and Hong Kong companies added to the U.S. entity list in 2023 and 2024 found more than a quarter contained erroneous details, such as incorrect names and addresses and outdated information. Buy in May? The U.S. stock rebound has gathered steam as the new month gets underway, confounding the old 'sell in May' adage, largely due to trade war de-escalation hopes and some selective tech optimism. April's employment report on Friday will tell us a lot about the durability of this rally, as last month's jobs market picture remained mixed. A big jump in jobless claims last week was put down to seasonal quirks related to a late Easter. Meanwhile, the broader economic picture continues to be less a cause for cheer than a case of "it could have been worse". ISM's manufacturing survey on Thursday showed an ongoing contraction in factory activity in April, but by slightly less than feared. Signs of some rowback in the extreme U.S.-China trade standoff could be more of a boost, coming as they do alongside the week's impressive Microsoft and Meta earnings beats. That said, the fortunes of Big Tech megacaps may be diverging. Apple (AAPL.O), opens new tab disappointed the Street overnight after it noted the high costs associated with shifting its supply chains, and its stock was down about 4% ahead of Friday's bell. And Amazon (AMZN.O), opens new tab shares were also down 2% as its cloud business and income guidance fell short of expectations. Pharma stocks were also hit on Thursday. Even though Eli Lilly (LLY.N), opens new tab results topped expectations, its shares tumbled 12% after CVS Health said it was dropping Lilly's obesity drug Zepbound from some lists of medicines covered for reimbursement. And yet the more positive mood music around the trade war seems to have encouraged the broader market nonetheless. Beijing is "evaluating" an offer from Washington to hold talks over President Donald Trump's steep tariffs, China's Commerce Ministry said on Friday, signalling a potential breakthrough in the severe faceoff. The pressure to talk has been building as the Trump administration ended U.S. duty-free access for low-value shipments from China and Hong Kong, removing"de minimis" exemptions. Taking it all in, however, S&P 500 futures were up another 0.5% ahead of Friday's open, adding to yesterday's cash market gains. Futures on the small cap Russell 2000 were up 1%. All of which means the main Wall Street indexes (.IXIC), opens new tab, (.SPX), opens new tab, (.RUT), opens new tab have recovered most or all of the losses seen since the April 2 tariff sweep, even though they remain deeply negative for the year. Given the unusually negative start for the year, many strategists wonder if seasonal trends captured in the "sell in May and go away" quip will hold this year. And most reckon the huge macro uncertainties mean it's equally impossible to apply it in reverse. Flipping back to Friday's diary, the payrolls report will dominate early on, with consensus set for a drop in job growth last month to 130,000. 'Big Oil' dominates the earnings slate. With next week's Federal Reserve meeting set to leave interest rates on hold for now, Treasury yields backed-up sharply on Thursday on a combination of relief at the ISM survey results and the stock market rally. The Trump administration was not short of advice for the Fed. Renewing his attack on Fed Chair Jerome Powell as "a guy in the Fed that I'm not a huge fan of", Trump said: "He should reduce interest rates. I think I understand interest a lot better than him, because I've had to really use interest rates." Treasury Secretary Scott Bessent also said the Fed should cut. "We are seeing that two-year rates are now below fed funds rates, so that's a market signal that they think the Fed should be cutting," he said. Maybe even more alarming for the bond market, Japan finance minister Katsunobu Kato said the country could use its $1 trillion-plus holdings of U.S. Treasuries as a card in trade talks with Washington, raising explicitly for the first time its leverage as a massive creditor to the United States. The dollar (.DXY), opens new tab fell back across the board, as the yen recouped some of its losses and China's offshore yuan hit its highest since March. Elsewhere, Britain's FTSE 100 (.FTSE), opens new tab is heading for its 15th straight consecutive daily gain, which would be the longest winning streak since the index was first compiled in 1984. Weekend reading suggestions Here are some articles away from the day-to-day headlines that you may find interesting. 1. TRADE DEFENSE: In a videoed conversation this week with Council on Foreign Relations President Michael Froman, Donald Trump's first term Trade Representative Robert Lighthizer, opens new tab shared his take on the current administration's trade agenda, sketching out the rationale for these policies. 2. TARIFF ILLUSION?: In an article published on CEPR's VoxEU site, geopolitics and economics professors Simon Evenett and Marc-Andreas Muendler, opens new tab examine the extent to which U.S. import tariffs could fund the government. 3. PARADISE LOST: Pacific archipelago Palau, the site of some brutal World War Two clashes, is once again on the frontline. Reuters correspondents Pete McKenzie and Hollie Adams show how China and the United States and its allies are preparing forces in an intensifying contest for control over the Asia-Pacific region. 4. TAX WEDGES: The annual OECD report, opens new tab on take-home pay shows that as inflation fell last year, the average worker's post-tax income rose in real terms in almost three quarters of the 38 countries surveyed after two years of declines for a majority of them. 5. ENDURING TAILWINDS: In an article for Project Syndicate, economist and professor Nouriel Roubini, opens new tab - once known as "Dr Doom" - takes a positive long-term view of the U.S. economy amid a blistering critique of the current administration. He argues that American private sector leadership in tech and other sectors will see it resume its 'exceptional' performance over the coming decade despite this year's policy shocks. 6. AI AND MINERALS: Reuters correspondent Ernest Scheyder shows how control of a U.S. government-created artificial intelligence program that aims to predict the supply and price of critical minerals has been transferred to a non-profit organization, helping miners and manufacturers strike supply deals. 7. RE-ARM, RE-GREEN: As Europe juggles defence and climate priorities, Bruegel Senior Fellow Simone Tagliapietra, opens new tab outlines seven converging interests between both agendas. 8. TRIPLE HEDGING: In another Project Syndicate article, economist and author Dambisa Moyo, opens new tab discusses how investors hedge against "worse case" scenarios of economic, financial and rule-of-law breakdowns, with the last of the three likely to require holding real, physical, portable assets. 9. RIGHT OFF: Reuters correspondents Anita Komuves, Andrew R.C. Marshall and Krisztina Than explain how U.S. tariffs have undermined hopes among Europe's far right leaders that Trump's presidency would usher in a golden era for them. Chart of the day It was a rollercoaster April for the so-called "Magnificent Seven" U.S. big tech megacap stocks - Microsoft, Apple, Alphabet, Amazon, Nvidia, Meta and Tesla. Exchange-traded funds invested in the group plunged as much as 13% after April 2's tariff sweep only to regain all that ground by May 1. First-quarter earnings from three of the seven were greeted favorably by investors in the past week, though Apple and Amazon were snubbed again overnight. Despite the wild swings, the Mag 7 remain down 12% for the year so far. Excluding these huge stocks, the rest of S&P 500 is effectively back to where it started 2025. Today's events to watch * US April employment report (8:30EDT), March factory orders (10:00EDT) * U.S. corporate earnings: Exxon, Chevron, Dupont De Nemours, Franklin Resources, T Rowe Price, Cigna, Apollo, Cboe Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias. By Mike Dolan; Editing by Anna Szymanski and Joe Bavier Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
Reuters
29-04-2025
- Business
- Reuters
Morning Bid: U.S. Trade fears ebb, Canada's Carney returns
LONDON, April 29 (Reuters) - What matters in U.S. and global markets today By Mike Dolan, opens new tab, Editor-At-Large, Financial Industry and Financial Markets A calmer mood has pervaded world markets this week, as a torrent of upcoming U.S. economic health reports and corporate updates are corralling stocks and hopes are rising for trade war de-escalation. But anxieties remain about volatile policymaking in Washington. In today's column, I look at the action the Trump administration could take that could truly create a dollar shock. Now onto the market news. Today's Market Minute * Canadian Prime Minister Mark Carney's Liberals retained power in the country's election on Monday. "Our old relationship with the United States, a relationship based on steadily increasing integration, is over," Carney said in a victory speech in Ottawa. * President Donald Trump's administration will seek to reduce the impact of his automotive tariffs by alleviating some duties imposed on foreign parts in domestically manufactured cars, officials said. * BP on Tuesday reported a deeper-than-expected 48% drop in net profit to $1.4 billion on weaker refining and gas trading and announced the departure of its strategy chief as it tries to shore up investor confidence. * HSBC warned that loan demand and credit quality could suffer from the broader fallout of U.S. President Donald Trump's global trade war, signalling tougher times for trade-focused banks even as the lender's first quarter profit beat forecasts. * Some third-party Amazon merchants who previously sold China-made goods during the online retailer's premier July shopping event are sitting it out this year or reducing the amount of discounted merchandise they offer. Trade fears ebb, Canada's Carney returns As Wall Street awaits numbers on GDP, inflation, jobs and megacap earnings, the latest twists in the tariff standoff have been in a positive direction. Washington appears to be rowing back some of the tensions, and there is now the prospect of at least some bilateral deals emerging over the coming week. President Donald Trump's administration will move to reduce the impact of his automotive tariffs on Tuesday, according to officials, by ensuring car companies paying tariffs will not be charged other levies, such as those on steel and aluminum. Meanwhile, Treasury Secretary Scott Bessent said many top trading partners of the United States had made "very good" proposals to avert U.S. tariffs. He also noted that one of the first deals to be signed would likely be with India this week or next. These slightly more positive soundings were enough to turn around intraday losses for the main U.S. stock indexes on Monday, and the S&P 500 (.SPX), opens new tab ended flat, with futures a touch higher before Tuesday's bell. North of the border, one clear political implication of Trump's trade and diplomatic policies also unfolded overnight. Canadian Prime Minister Mark Carney was set to return as the country's leader as his Liberal Party, miles behind in opinion polls as recently as January, looks set to be the biggest party after Monday's election, albeit just shy of an overall majority. The Canadian dollar , which has appreciated more than 3% against the greenback this month and almost 4% for the year so far, held firm as the results streamed in. Back on Wall Street, there was a heavy diary slated for Tuesday, including April consumer confidence readouts and March trade data. March job openings numbers also kick off the week's big labor market tallies. U.S. Treasuries rallied on Monday in advance, with a dour manufacturing survey from the Dallas Federal Reserve for April acting as a tailwind by nudging up bets for Fed rate cuts a tad. Staying with Treasuries, 2- and 10-year yields hit their lowest in more than three weeks on Monday, although they backed up a bit today. The dollar (.DXY), opens new tab - seemingly hurt whether Treasury yields go up or down these days - ebbed again, most obviously against China's yuan . Sterling also hit a more than three-year high against the dollar on Monday, with positive momentum behind UK stocks (.FTMC), opens new tab, (.FTSE), opens new tab building and the Bank of England dragging its feet on interest rate cuts. It has ticked back only marginally today. The rally in Treasuries came despite what appeared to be worrying U.S. government borrowing projections. The Treasury said on Monday it expects to borrow $514 billion in the second quarter, $391 billion higher than its February estimate, mainly due to a lower cash balance at the beginning of the quarter and projected lower net cash flows. These figures likely do not include any revenues from tariffs, though these are still highly uncertain, and markets assume the Treasury will leave most of its auction sizes unchanged for the fifth straight quarter when it announces its refunding plans on Wednesday. In Europe, most of the market attention �t;�ࢀt;STOXX�ࢀt; was on the earnings season there. Shares of HSBC (HSBA.L), opens new tab rose 2.5% after the London-based lender launched a $3 billion share buyback, while Deutsche Bank ( opens new tab advanced almost 3% after Germany's largest lender posted a 39% rise in first-quarter profit. BP BP.L was a darker story, with its shares down 3.5% after the oil giant reported a deeper-than-expected 48% drop in net profit to $1.4 billion on weaker refining and gas trading. Finally, make sure to check out my column today, where I turn to the U.S. and consider what could happen if the Trump administration were to take the previously unthinkable step of leaving the IMF. Chart of the day Surprise, surprise! Economic "surprise" indexes that measure incoming economic data relative to consensus forecasts show that U.S. gauges are marginally back in positive territory for the first time since mid-February. The rebound in the index likely says as much about the extent to which forecasts have been slashed due to tariff-related uncertainties as it does about any upturn in activity per se. But financial markets price expectations, so the fact that expectations are no longer being undercut by the actual numbers has helped calm the horses, at least for now. Today's events to watch * US April consumer confidence, March international goods trade balance, March retail/wholesale inventories, March JOLTS hob openings data, February house prices, Dallas Federal Reserve April service sector survey * Canada election results stream in * European Central Bank conference on spillovers from monetary policy, with ECB board member Piero Cipollone and ECB supervisor Sharon Donnery; Bank of England Deputy Governor Dave Ramsden speaks * EU Trade Commissioner Maros Sefcovic meets UK Foreign Minister David Lammy and Trade Secretary Jonathan Reynolds in London * U.S. corporate earnings: Pfizer, Corning, Regeneron, Visa, Starbucks, UPS, Coca-Cola, Edison, Kraft Heinz, General Motors, Honeywell, PPG, Ecolab, S&PGlobal First Solar, Hilton Worldwide, Paccar, Seagate, Sysco, Co-Star, Sherwin Williams, American Tower, AO Smith, Altria, Booking, Caesars Entertainment, Regency Centers, Royal Caribbean, Incyte, XYlem, Zebra, Veralto, Essex Property, Entergy, Expand, Mondelez, ONEOK Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
Reuters
14-04-2025
- Business
- Reuters
Easter rising? Markets seek solace
LONDON, April 14 (Reuters) - What matters in U.S. and global markets today By Mike Dolan, opens new tab, Editor-At-Large, Financial Industry and Financial Markets here. For investors praying for some respite from weeks of extreme volatility as the Easter break approaches, weekend events weren't all that encouraging. Even though a late stock market rally on Wall Street on Friday has been extended in futures prices into a new holiday-shortened week, flip-flopping of U.S. trade policy announcements over the past two days doesn't bode well for corporate and household planning - or indeed market stability. Another big focus of the week will be central bank meetings in Canada and in the euro zone, with both the European Central Bank and the Bank of Canada expected to lower interest rates by a quarter point each. Today, we look at the ECB's decision in detail and how it will view the sharp appreciation of the euro in its deliberations. Many fear it may start to become wary of deflationary forces building. Today's Market Minute U.S. President Donald Trump on Sunday said he would be announcing the tariff rate on imported semiconductors over the next week, adding that there would be flexibility with some companies in the sector. China's exports rose sharply in March after factories rushed out shipments before the latest U.S. tariffs took effect, but an escalating Sino-U.S. trade war has darkened the outlook for factories and growth in the world's second-biggest economy. Japan is gearing up for trade negotiations with the United States that will likely touch on the thorny topic of currency policy, with some officials privately bracing for Washington to call on Tokyo to prop up the yen. Iran and the U.S. said they held "constructive" talks on Saturday and agreed to reconvene next week in a dialogue meant to address Tehran's escalating nuclear programme, with Trump threatening military action if there is no deal. Credit ratings agency S&P Global upgraded Italy on Friday in a surprise move just days after Rome halved its economic growth forecast amid global market turmoil and said its huge public debt would rise this year and next. Easter rising? Markets seek solace In Washington's second significant retreat from its sweeping April 2 trade tariff plans, President Donald Trump granted exclusions from steep tariffs on smartphones, computers and some other electronics imported largely from China - sizeable relief to tech firms like Apple reliant on imported products. That in itself may have bamboozled anyone trying to frontload electronic purchases to beat the tariffs, but before the weekend was out, the picture changed yet again. Trump on Sunday announced a national security trade probe into the semiconductor sector and then said he would announce the tariff rate on imported semiconductors over the next week, with "certain flexibility" for some companies in the sector. It's probably wise to prepare for at least three more months of this. Households were certainly pessimistic. The University of Michigan Surveys of Consumers on Friday said its monthly consumer sentiment reading dropped much further than forecast to its lowest in almost three years. But perhaps most alarming was its reading of consumer price views, which showed 12-month inflation expectations soaring to 6.7% - the highest reading since 1981. After a week in which the U.S. long-bond yield surged by its most since 1987, there's a pattern developing perhaps. The New York Federal Reserve publishes its equivalent survey later on Monday - though markets will be bracing more for the release of hard U.S. retail sales numbers later this week. A question in these will be whether consumers have stepped up goods purchases in advance of expected tariff increases. While Wall Street stock futures showed some stability, the plummeting dollar (.DXY), opens new tab - which hit three-year lows against the euro on Friday - continued to ebb on Monday. But U.S. 10-year and 30-year Treasury yields did calm down a little - the former hovering just under 4.45%. Chart of the Day: In a world of such dramatic fundamental policy and economic disruptions, financial chart patterns and trends may seem a little beside the point. But some of these remain important for investment funds and strategists who rely on market momentum signals. One of the most basic is how the stock market is trading relative to its long-term 200-day moving average. The S&P500 fell below this on March 11 and has lost more than 500 points since then as the tariff war ensued. Another closely watched momentum signal is when the shorter-term 50-day average moves above or below the 200-day line. And it's now about to slice below it for the first time in more than a year, a move ominously dubbed a "Death Cross". The last time this happened in 2022, the S&P500 lost almost 1,000 points over the subsequent six months. Today's events to watch * New York Federal Reserve's March consumer sentiment survey and inflation expectations * Federal Reserve Board Governor Christopher Waller, Richmond Fed President Thomas Barkin, Philadelphia Fed chief Patrick Harker and Atlanta Fed boss Raphael Bostic all speak * U.S. corporate earnings: Goldman Sachs, M&T Bank * U.S. Treasury Secretary Scott Bessent visits Argentina to meet Argentine President Javier Milei. * China's President Xi Jinping will pay a state visit to Vietnam
