Markets reel from Trump tariffs, Apple stock plunge, trade wars and corporate reviews
Latest stock market news
• US stock indices fell by 5-6% yesterday. Only the defensive XLV, XLP, XLU stayed around zero. A classic example of the genre, when investors start to fear a crisis. But there is no panic yet. And that means there may be even more pain ahead.
Trump said that things are "going very well."
By the way, Bitcoin is holding steady at around $83 thousand. But other cryptocurrencies have resumed their search for the bottom. Well, I don't envy the owners of altcoins at all now.
• Today was another day of suffering for Asia, with the Nikkei falling 3% and down 9.6% for the week, its biggest drop since the pandemic began in March 2020. Wall Street futures were initially steady but have since fallen about 0.7%, while European stock futures have fallen 0.3% to 0.6%.
The dollar has lost 2.7% for the week against the yen and 3.0% against the Swiss dollar, while the euro has gained 2.4%. So much for the rates that are bullish for the US dollar.
• It's no wonder that unexpected turns in US policy send investors running in fear: If you start an unprovoked trade war with allies and adversaries alike, with no clear goal other than apparently getting money or favors, don't be surprised if you don't end up high on investors' Christmas card lists.
For decades, global investors have put 70% of their equity wealth into U.S. stocks, analysts note, far exceeding the economy’s 26% share of global GDP. If that privileged status is lost, say, by the outbreak of a global trade war, money could well flow the other way.
The amounts at issue would dwarf any increase in tariffs on the dollar by the US, which is buying fewer imports, while squeezing out foreign investors with unhedged positions on Wall Street - which is most of them.
When it comes to encouraging additional investment in U.S. manufacturing, what firm wants to take a risk when the White House can change the rules on the fly?
If the idea is that these punitive tariff rates are just a bargaining ploy that can be relaxed if countries pay enough to satisfy Trump, that just highlights the problem. Unpredictability may be acceptable in game theory, but not when you’re a company risking billions of dollars in a multi-year investment decision.
• Apple's supply chains. Take Apple. Its supply chains are deeply rooted in Asia, where tariffs now range from 24% to 54%. Even if it could move some of its production to the States, a big problem, the resulting iPhones would cost many times more than they do now.
Apple's high profit margins mean the company is better able than most to absorb some of the tariffs in the short term, but it's those Kobe beef-like profit margins that justify the stock's sky-high rating.
• And spare a thought for the Fed, caught between an almost inevitable jump in consumer prices and a growing risk of recession as consumers and businesses cut spending. Fed funds futures rose another 9 basis points for December today, implying 99 basis points of cuts this year. That's a sure sign that markets think the rise in unemployment will outweigh (sorry) the jump in inflation and force the Fed to ease rates.
I think Fed Chairman Powell is looking forward to his speech on the economy today.
• The S&P 500 and NASDAQ 100 had their worst day in 5 years - since the pandemic. The magic seven lost a record $1 trillion in capitalization. Trump-pair-pa-pam.
• A neural network has passed the Turing test for the first time, scientists from the University of California, San Diego reported.
GPT-4.5 was mistaken for a human in 73% of cases, while living participants were mistaken for one in only 63%. The AI turned out to be more convincing than people in deception, the study notes.
• The US dollar is now used in almost 50% of global payments, the highest level in 12 years - Gavekal Research. Euro share falls
The US dollar has fallen against the euro by more than 2%, the biggest in 10 years, following Trump's tariffs.
The US dollar has fallen against major world currencies - the euro, Japanese yen, Swiss franc, British pound.
• Canadian PM Carney: Canada to impose 25% tariffs on all vehicles imported from the US that are not compliant with the USMCA trade agreement.
• US Vice President Vance: TikTok deal will be signed before Saturday deadline.
Experts believe that the TikTok deal is, to some extent, a bargaining chip in US-China tariff negotiations. Trump indirectly confirmed this by recently saying that the US could ease tariffs on China if a successful TikTok deal is reached.
• There is no panic in the market - the VIX fear index has not even broken through the 30 mark and remains below the peak of March 10. Sales are proceeding calmly and without excitement.
• Shares in global trade leader Maersk fall 7% on new US tariffs.
• The cost of Apple (AAPL) products could rise due to trade tariffs imposed by the United States.
Some of the highest tariffs are in countries where the company assembles its equipment: Vietnam (46%), China (34%) and India (26%).
Apple will either have to pay tariffs and lose profits, or pass on the costs to customers, writes The New York Times. The company's shares have already fallen by 5.7% in secondary trading.
BofA Securities adjusted its price target for Apple (AAPL) due to increased risks from China.
They expect Apple to cope with supply chain problems, but noted the potential impact on profits if the tariffs remain.
• The US House Financial Services Committee has backed a bill to regulate stablecoins.
Circle's USDC stablecoin is now the default currency for all new Binance Pay users.
• Chrysler's parent company, Stellantis (STLA), will temporarily suspend production at two plants in Mexico and Canada after new tariffs were imposed.
• Google Cloud (GOOG) announced an expanded partnership with Papa Johns (PZZA) to improve their ordering and delivery systems using AI.
• Microsoft (MSFT) has suspended several data center construction projects around the world,
raising questions about demand and construction issues.
• Micron Technology (MU), On Semiconductor (ON), and Broadcom (AVGO) have been identified as vulnerable to new tariffs, according to Citi.
These companies face potential margin volatility and market pressure from tariffs.
• European stocks fell the most since August on tariff shock, with Walmart (WMT), Amazon (AMZN) and Target (TGT) discussing sales losses after tariff announcements.
• New tariffs are expected to impact prices and competition, raising concerns about the risks of inflation and recession.
• Gold prices fell as investors took profits amid overall market negativity.
• OPEC+ will increase oil production by 411 thousand barrels per day in April. Oil prices fell by 7%.
• RH shares fell 40% yesterday following the report.
Key events that could impact markets on Friday:
- EU Construction PMI, German Industrial Orders, UK PMI.
- Speeches by Fed Chair Powell, Governors Waller and Barr.
- US Payrolls Report for March.
Current Fundamental Reviews
• Trump declared an economic emergency last night,
giving him sweeping powers to impose tariffs. His order said disparate tariff rates and lack of reciprocity in bilateral trade relations, as evidenced by the U.S. trade deficit, have become an unusual and extraordinary national security threat.
The tariffs will remain in place until President Trump determines that the threat posed by the trade deficit and the nonreciprocity that underlies them is satisfied, eliminated, or mitigated - White House statement on new U.S. tariffs.
The US has not imposed reciprocal tariffs on Russia, Belarus, Cuba and North Korea. Because these countries "already face extremely high tariffs, and our previously imposed sanctions prevent any meaningful trade with these countries," a White House source explained to The New York Times.
China, which already faces a general 20% tariff on goods shipped to the US, will now face a 54% tariff - CNN.
• The US remains in NATO, - Rubio. US Secretary of State Marco Rubio said that the US is part of NATO and we are as active as we were before, despite all the hysteria that is happening in the world.
• Austrian Economy Minister: To force Trump to the negotiating table, we need to impose tariffs that will hit Republican states and his friends, including tech companies.
• Macron calls on French companies to suspend investments in the US.
• Bessent urged all countries to "sit still and accept new tariffs": Everything we do must lead to long-term economic growth. We were on the road to a major financial crisis. My advice to every country right now is not to retaliate. Sit still. Accept it. Let's see how it goes, because if you retaliate, there will be an escalation.
• The EU offers Trump talks on lifting trade barriers. But will introduce retaliatory measures if the dialogue does not produce results, - von der Leyen.
• Britain intends to remain calm and work towards a trade deal with the US amid the introduction of tariffs by the Trump administration - UK Business and Trade Secretary Jonathan Reynolds.
• Kazakhstan has announced the discovery of one of the largest rare earth metal deposits in the world - Reuters.
The deposit is located at a depth of up to three hundred meters and contains neodymium, cerium, lanthanum and yttrium. The total volume of estimated reserves is more than 20 million tons. If the information from the Kazakh authorities is confirmed, the country could take third place in the world after China and Brazil in terms of proven reserves.
• Hungary withdraws from the International Criminal Court. The government of Viktor Orban has officially announced its withdrawal from the ICC. This happened against the backdrop of a visit to the country by Israeli Prime Minister Benjamin Netanyahu - in November 2024, the ICC issued an arrest warrant against him.
• The United States has banned Americans in China from engaging in any romantic or sexual relationships with Chinese people, a rule not seen since the Cold War, Associated Press.
• Spain has been stopping issuing “golden visas” for investors since April. Similar decisions have already been taken by Ireland and Portugal. This decision by the Spanish government coincides with the recommendation of the European Commission, which in 2022 called on EU member states to abolish any programs that grant citizenship or residence rights in exchange for investment.
• Goldman Sachs estimates that new US tariffs will reduce China's GDP growth by another 1%, for an overall slowdown of 1.7%.
• The US will be hit hardest. Prices in America will rise by 5.5%, higher than anywhere else after Trump's new tariffs, - FT.
• UBS warns: If Trump's import tariffs become permanent, inflation will soar to 5% and the US economy will begin to decline. The reason is rising prices due to more expensive imports.
Inflation and recession on the horizon - not the best forecast for the market.
• Bets have begun to rise sharply that the Fed will cut rates more aggressively this year. UBS already expects the Fed to cut rates by another 0.75% to 1% in total this year./ But that doesn't match expectations for rising inflation.
• Morgan Stanley now does not expect the US Federal Reserve to cut interest rates in 2025,
while it previously forecast one cut of 25 bps in June.
• US Commerce Secretary Lutnick: US interest rates will be significantly lower.
• Fresh German Business Activity Data:
Services PMI 50.9 (expected 50.2 / previous 51.1).
Fresh Eurozone Business Activity Data: Services PMI 51.0 (expected 50.4 / previous 50.6).
Fresh Eurozone Inflation Data PPI p/y=3.0% (pop 1.7% adjusted).
m/m=0.7% (expected 0.3% / pop 0.7% adjusted).
S&P Global Services PMI 54.4 (expected 54.3 / pop 51.0).
• US Business Activity Indicators: ISM Non-Manufacturing PMI.
50.8 (exp. 53.0 / pop. 53.5).
• The U.S. international trade deficit narrowed in February as exports rose and imports fell slightly.
However, the goods deficit and services surplus narrowed, reflecting ongoing trade challenges.
• Fitch downgraded China's rating to 'A' and its 2025 GDP growth forecast to 4.4% from 5% previously.
China said Fitch had made a bespoke decision.