InvestMacro

At the end of Wednesday, the Dow Jones Index (US30) fell by 1.73%. The S&P 500 Index (US500) was down 2.24%. The Nasdaq Technology Index (US100) lost 3.04%. Wall Street faced a broad sell-off on Wednesday, led by a sharp drop in technology stocks amid escalating trade tensions and cautious remarks from Federal Reserve Chairman Jerome Powell. Nvidia fell by 6.9% after the chipmaker said it will have to pay $5.5 billion because of new restrictions on US exports of artificial intelligence chips destined for China. Other chipmakers followed: AMD (-7.3%) and Micron Technology (-2.4%) fell amid cost warnings and weak demand. Powell’s speech in Chicago added to market worries, warning that tariffs could push up inflation and slow growth, creating a dilemma for the Fed’s dual mandate. Investors were frustrated by the lack of a clear signal of future rate cuts, causing major indexes to fall to session lows.

The Bank of Canada kept its benchmark rate at 2.75%, its first pause after a cumulative 2.25 percentage point cut over seven meetings, citing the unclear outlook for tariffs in the US, which could either support solid growth with inflation near 2% or, if tariffs intensify, trigger a recession and higher inflation. This cautious stance has reinforced expectations of stable monetary policy in Canada, which has supported the Canadian dollar, while the US dollar is weakening under the weight of potential new tariffs on critical minerals, adding further uncertainty to the US growth outlook.

The World Trade Organization (WTO) warned that global trade could contract by 1.5% in 2025 if Donald Trump’s aggressive tariff policies cause widespread trade uncertainty, in sharp contrast to the previous expectations of 2.7% growth.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 0.27%, France’s CAC 40 (FR40) closed 0.07% higher, Spain’s IBEX 35 (ES35) added 0.49%, and the UK’s FTSE 100 (UK100) closed positive 0.32%.

WTI crude oil prices hit $63 per barrel as new US sanctions against Chinese importers of Iranian oil renewed supply concerns. The sanctions are aimed at reducing Iran’s oil exports as nuclear talks resume, fueling fears of dwindling global supplies. Prices were further supported by an OPEC report that Iraq, Kazakhstan, and other countries are planning additional production cuts to offset previous overproduction.

Asian markets were predominantly falling yesterday. Japan’s Nikkei 225 (JP225) was down 1.01%, China’s FTSE China A50 (CHA50) added 0.48%, Hong Kong’s Hang Seng (HK50) was down 1.91%, and Australia’s ASX 200 (AU200) was negative 0.04%.

New Zealand’s annualized inflation rate rose to 2.5% in the first quarter, slightly above market expectations of 2.3%, up from 2.2% in the previous quarter. Despite the rise, the rate was within the Reserve Bank of New Zealand’s target range of 1-3% for the third consecutive quarter, reinforcing the view that this will not prevent further rate cuts. Markets still expect another 25bp rate cut at the next RBNZ meeting in May, with rates likely to reach the 2.75% level by the end of the year.

On Thursday, the Australian dollar slipped to USD 0.635, breaking a six-day winning streak, as weaker-than-expected employment data fueled expectations of further monetary easing by the Reserve Bank of Australia. While the unemployment rate remained at a low 4.1%, employment growth in March came in below expectations. This boosted bets that the RBA would cut interest rates by 25 basis points in May, with some even speculating a possible 50 basis point hike amid growing fears of a tariff-induced slowdown in the global economy.

At the end of Monday, the Dow Jones Index (US30) rose by 0.78%. The S&P 500 Index (US500) was up 0.79%. The Nasdaq Technology Index (US100) jumped by 0.57%. The US stocks rose on Monday after a volatile week as investors welcomed temporary tariff relief. Apple and Dell shares rose by 2.2% and 4%, respectively. Automakers also rose after Trump signaled a potential easing of 25% tariffs on cars, noting that companies need more time to move production to the US. Shares of Ford, GM, Stellantis, and Rivian jumped 3–6%, Tesla rose, and Toyota and Honda added more than 1%. Goldman Sachs added 1.9% after reporting strong quarterly earnings.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 2.85%, France’s CAC 40 (FR 40) closed 2.37% higher, Spain’s IBEX 35 (ES35) gained 2.64%, and the UK’s FTSE 100 (UK100) closed 2.14% higher. European stocks rose sharply on Monday after US President Trump announced a temporary pause in imposing retaliatory tariffs on a range of computers and consumer electronics products. Banks and insurance companies rose as Eurozone bonds rose and yield spreads between its members narrowed, with BNP Paribas, UniCredit, Santander, and Munich Re up 6.5–4%.

Swiss producer and import prices fell by 0.1% year-on-year in March 2025, the same pace as the previous month. This marked the 23rd consecutive period of producer price deflation and the softest pace in the sequence.

WTI crude oil prices hovered near $61.5 a barrel on Tuesday amid news of a possible easing of restrictions on Iranian oil and a temporary postponement of tariffs imposed by the US Nuclear talks between the US and Iran, which have been described as “constructive,” have raised hopes of increased Iranian oil exports, putting downward pressure on prices. However, OPEC revised its 2025–26 demand growth projections downward by 100,000 bpd to reflect lower consumption due to US tariffs, although it still expects growth of 1.3 million bpd a year.

Silver prices fell to around $32 an ounce on Monday, breaking a three-day rally, as easing trade tensions reduced demand for safe-haven assets. Market attention is now focused on upcoming trade talks between the US and key partners, including Japan, India, and South Korea. Silver has gained over 8% in the previous three sessions as heightened trade tensions and concerns over the US economic outlook have caused investors to turn to alternative assets.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) gained 1.18%, China’s FTSE China A50 (CHA50) climbed 0.34%, Hong Kong’s Hang Seng (HK50) rose by 2.40%, and Australia’s ASX 200 (AU200) gained 1.34%.

On Tuesday, the Australian dollar climbed as high as USD 0.635, posting a fifth consecutive session of gains as improving global risk appetite fueled the rally. On the domestic front, minutes from the Reserve Bank of Australia’s (RBA) April meeting failed to provide clarity on the timing of the next interest rate change. Policymakers pointed to heightened uncertainty both at home and abroad, making future policy decisions data-driven.

The New Zealand dollar rose to around 0.590 of the US dollar on Tuesday, rising for a sixth straight session and hitting its highest level since early December 2024, as risk sentiment continued to improve. Investors await the release of key economic data this week, including the first-quarter consumer inflation report and the March trade balance, to gain a better understanding of price pressures and overall economic conditions. Following the RBNZ’s recent rate cut to 3.5%, investors are expecting further signs of a slowing economy.

At Friday’s close, the Dow Jones Index (US30) was up 1.56% (for the week +6.16%). The S&P 500 Index (US500) gained 1.81% (for the week +8.27%). The Nasdaq Technology Index (US100) jumped 1.89% (for the week +11.44%). The US stocks rose on Friday, ending a turbulent week on a high note, with hopes of a possible trade deal between the US and China lifting investor sentiment. Trump is optimistic about striking a deal with China even as trade tensions escalate, with Trump raising tariffs on Chinese goods to 145% and China retaliating by imposing 125% duties on imports from the US. On the economic front, a University of Michigan survey showed that consumer sentiment is at its lowest level since 2022, and inflation expectations have reached a peak not seen since 1981. Meanwhile, earnings season got off to a mixed start with mixed banking results. For example, Wells Fargo Bank shares fell 1%, while Morgan Stanley added 1.4% and JPMorgan rose by 4% after posting record earnings.

The Canadian dollar strengthened to $1.39 in April, hitting a five-month high, driven by a marked weakening of the US dollar as investors exited US assets amid growing fears of recession and high inflation. Escalating trade tensions between the US and China further undermined confidence in the outlook for the US economy. While the 90-day truce announced by President Trump briefly raised hopes of renewed trade talks, growing concerns about the US outlook led capital to return to Canada, helping to drive the Lonnie higher.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) fell by 0.92% (for the week +5.98%), France’s CAC 40 (FR40) closed 0.30% lower (for the week +3.60%), Spain’s IBEX 35 (ES35) lost 0.18% (for the week +5.57%), and the UK’s FTSE 100 (UK100) closed positive 0.64% (for the week -1.13%). European stock markets reversed early gains and closed lower, ending a turbulent week dominated by escalating trade tensions between the US and China. The EU confirmed that it will not compromise on its digital regulatory framework as part of any potential trade agreement with the US. As for domestic data, Germany’s annual inflation rate for March 2025 was confirmed at 2.2%, down slightly from 2.3%, the lowest since last November. European stock markets are expecting a strong start to Monday after US President Donald Trump announced the exemption of key technology goods from recently imposed tariffs, boosting global investor sentiment.

Sweden’s annual inflation rate for March 2025 fell to 0.5%, confirming initial estimates, from 1.3% in February. This is the lowest since December 2020 and marks the eighth consecutive month inflation has remained below the Riksbank’s 2% target. Meanwhile, the fixed-rate Consumer Price Index, the Riksbank’s target variable, rose 2.3% in March, matching the preliminary reading and down from February’s annualized high of 2.9%.

Silver (XAG/USD) rose above $31.20 an ounce on Friday, posting gains for the third consecutive session, as a generally weaker US dollar and renewed economic concerns spurred demand for alternative assets. The metal also benefited from rising safe haven flows as the dollar lost some of its traditional safe haven appeal.

WTI crude oil prices rose by 2.4% to settle at $61.50 a barrel on Friday after US Energy Secretary Chris Wright said the US could block Iranian oil exports as part of efforts to pressure Tehran over its nuclear program. Nevertheless, concerns over the US-China trade dispute continued to weigh on demand expectations. Meanwhile, OPEC+ surprised markets by accelerating plans to increase production, raising concerns about oversupply.

Asian markets were predominantly up last week. Japan’s Nikkei 225 (JP225) rose by 7.75% for the week, China’s FTSE China A50 (CHA50) climbed 3.16%, Hong Kong’s Hang Seng (HK50) gained 0.89%, and Australia’s ASX 200 (AU200) was positive 6.04%.

Exports from China rose 12.4% year-on-year to US$313.9 billion in March 2025, well above market expectations of 4.4% and sharply accelerating from a 2.3% increase in January-February. This is the fastest growth in overseas sales since last October, reflecting an expected increase in US tariffs under Trump that will take effect in April. In the first quarter of 2025, exports rose 5.8% from the same period in 2024 to US $853.7 billion.

The Australian dollar strengthened to around $0.63 on Monday, posting a fourth straight session of gains as US President Donald Trump exempted key technology goods from his new “retaliatory” tariffs, boosting risk sentiment globally. The exemption applies to goods that are largely made in China, including smartphones, computers, semiconductors, solar panels, and flat-panel displays. China’s Ministry of Commerce called the duty exemption a “small step” but urged the US to eliminate the broader 145% tax on Chinese goods. China remains Australia’s largest trading partner and a major buyer of its goods, so the Australian dollar is particularly sensitive to the developing trade relationship between the US and China.

The Dow Jones index (US30) was down 2.50% at Thursday’s close. The S&P500 Index (US500) was down 3.46%. The Nasdaq Technology Index (US100) fell by 4.19%. The White House announced it would raise tariffs on China to 145%, adding uncertainty and fueling fears that trade wars could lead the US into recession. Technology giants led the decline, with Tesla falling 10% and Nvidia, Apple, and Amazon losing more than 6.5%. Oil producers also declined amid falling energy prices, with Chevron and Exxon Mobil falling -6% each. After yesterday’s rally sparked by Trump’s tariff pause, investors’ concerns about economic growth came to the forefront despite evidence of disinflation in today’s CPI data. The annualized US inflation rate fell for the second consecutive month to 2.4% in March 2025, the lowest since September, down from 2.8% in February and below forecasts of 2.6%. Meanwhile, annual core inflation fell to 2.8%, the lowest since March 2021 and below forecasts of 3%.

The Mexican peso (MXN) weakened to 20.5 per dollar, hitting its lowest since March 2022, as continued uncertainty over US trade policy renewed risk aversion and pressured emerging markets. For Mexico, whose economy is closely intertwined with US supply chains, the lack of clarity on the trajectory of global trade poses a direct threat to industrial activity and capital flows. Without a near-term solution, investors shift to safer assets, putting pressure on the peso as markets navigate a highly volatile and fragmented trade situation. Tariffs have already led to plant shutdowns in Mexico. With the looming threat of recession in the US, Mexico’s export prospects have deteriorated.

Equity markets in Europe were mostly down on Thursday. Germany’s DAX (DE40) rose by 4.53%, France’s CAC 40 (FR40) closed up 3.83%, Spain’s IBEX 35 (ES35) gained 4.32%, and the UK’s FTSE 100 (UK100) closed up 3.04% on Thursday. The suspension of tariffs by the EU and the US helped ease fears of a slowing global economy and rising inflation. On Thursday, the European Union announced a 90-day suspension of new tariffs on the US to allow for trade talks, following US President Trump’s decision to slap tariffs on countries that failed to retaliate to his initial trade sanctions. Currently, the US maintains base tariffs of 10% on imports from all countries, including the EU, with some exceptions, while automobiles are still subject to a 25% duty.

The US natural gas prices fell more than 6.5% to $3.55/MMBtu amid a larger-than-expected increase in storage inventories and forecasts of mild weather and lower demand. The EIA reported pumping 57 Bcf into storage last week, well above the five-year average of 17 Bcf.

WTI crude prices fell by 3.7% to $60.1 a barrel on Thursday after rising 4.6% in the previous session as escalating trade tensions between the US and China renewed demand concerns. President Trump raised tariffs on China to 145% just a day after a 104% increase took effect. Although he suspended imposing new tariffs on other countries for 90 days, the sharply escalating relationship with China, the world’s top oil importer, has raised fears of reduced demand for fuel. China has raised tariffs on US goods to 84% and is expected to unveil stimulus measures to support sectors such as housing and consumption.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 9.13% over yesterday, China’s FTSE China A50 (CHA50) added 0.86%, Hong Kong’s Hang Seng (HK50) rose 2.06%, and Australia’s ASX 200 (AU200) was positive 4.54%. The White House announced that US tariffs on China now stand at 145%, a day after markets rose on President Trump’s decision to delay the imposition of some duties. The Hang Seng Index is on track for its fifth weekly decline, down nearly 10% this week. Traders are awaiting China’s March trade data due over the weekend amid concerns that exports and imports may start to feel the strain of rising tariffs. However, losses were tempered by hopes of new stimulus, with reports on Thursday of a meeting of China’s top leaders to discuss new support measures.

Reserve Bank of Australia (RBA) Governor Michelle Bullock declined to recommend an early interest rate cut, saying, “It is too early for us to determine what the path of interest rates will be.” The RBA emphasized that it continues to monitor domestic and global markets, including exchange rate movements and the reaction of trading partners. While markets have priced in the possibility of a 50 bps rate cut in May and even called for an emergency rate cut ahead of the board’s next meeting, Bullock reiterated that its focus remains on its dual mandate of price stability and full employment.

By Wednesday’s close, the Dow Jones Index (US30) was up 7.87%, its biggest gain since March 2020. The S&P 500 Index (US500) was up 9.52%, posting its most significant jump since 2008. The Nasdaq Technology Index (US100) flew 12.02%, the biggest one-day gain since 2001. The sharp rise in the indices came after President Trump announced that the US would suspend retaliatory tariffs against countries that failed to retaliate for 90 days. This policy change helped defuse the uncertainty that had gripped global markets in recent weeks, restored risk appetite, and relieved investors. In turn, the US President has heightened tensions with China by raising his tariffs to 125% in response to China’s retaliatory measures.

Minutes from the FOMC meeting underscored concerns about tariff-related inflation. Fed policymakers expect inflation to pick up this year due to the impact of tariff increases, although they recognize considerable uncertainty about the magnitude and sustainability of these effects. At the same time, most officials noted the possibility that inflationary pressures from a variety of sources might be more persistent than previously thought. Almost all participants viewed inflation risks as upside risks and employment risks as downside risks.

The Mexican peso strengthened to 20.2 per dollar, amid easing fears of a global recession and a marked improvement in the demand outlook for Mexican exports, especially in the US, its largest trading partner. Mexican inflation rose to 3.80% in March 2025 from 3.77% in the previous month, in line with market expectations and the highest this year, but remained below the upper threshold of the Bank of Mexico’s 4% inflation target.

Equity markets in Europe were mostly down on Wednesday. Germany’s DAX (DE40) fell by 3.00%, France’s CAC 40 (FR40) closed down 3.34%, Spain’s IBEX 35 (ES35) lost 2.22%, and the UK’s FTSE 100 (UK100) closed down 2.92%. Frankfurt’s DAX Index closed 3% lower on Wednesday, the lowest since late November, reflecting negative sentiment in European markets. China’s announcement of 84% tariffs on US goods escalated the trade war with President Donald Trump and added to selling pressure. Investors have already reacted to retaliatory US tariffs, including a 20% levy on EU imports that took effect today, while the EU approved its first countermeasures against US tariffs.

WTI crude futures rose sharply on Wednesday, climbing more than 4% to trade above $62 a barrel, amid easing recession fears and an improving outlook for energy demand. While China remains off suspension, tariffs on its exports have now been raised to 125% in response to its latest round of retaliatory measures — the broader easing of trade tensions has helped restore confidence in commodity markets. The rally was further supported by the latest EIA report, which showed a larger-than-expected decline in gasoline and distillate inventories, which helped offset a modest rise in crude oil inventories.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) fell by 3.93%, China’s FTSE China A50 (CHA50) added 0.29%, Hong Kong’s Hang Seng (HK50) gained 0.68%, and Australia’s ASX 200 (AU200) was negative 1.80%. Asian equity markets soared on Thursday, following a historic rally on Wall Street after President Trump reduced new tariffs on imports from most US trading partners to 10% for 90 days to allow for trade negotiations. This is a significant reduction from previous duties applied to Japan (24%) and South Korea (25%), although China faces a higher rate of 125% amid escalating trade relations with the US.

The offshore yuan depreciated to around 7.36 per dollar, pressured by rising deflationary fears amid escalating trade tensions between the US and China. China’s inflation data for March showed consumer prices declined for the second consecutive month, falling 0.1% year-on-year, down from February’s 0.7% drop and short of expectations. Producer prices also continued to decline, falling 2.5%, down 2.2% from February and beating expectations. These data indicate continued deflationary pressures, raising concerns about China’s economic recovery and strengthening the case for further monetary easing amid increased tariff risks.

The Dow Jones Index (US30) was down 0.84% at Tuesday’s close. The S&P 500 Index (US500) was down 1.57%. The Nasdaq Technology Index (US100) decreases by 1.95%. President Trump’s announcement that tariffs on Chinese imports will rise to 104% starting tomorrow was a strong move toward protectionism. It heightened fears of a protracted economic conflict between the world’s largest economies. The move sparked widespread risk aversion and accelerated capital outflows from trade-dependent economies.

The Canadian dollar strengthened to $1.41, approaching a four-month high on April 3, as investors assess Canada’s relative defensiveness against tough new US tariffs. Signals that Canada will largely remain free of expanded duties under the USMCA have helped ease trade fears, and ongoing international tariff negotiations continue to provide support. Domestically, Canadian business confidence remains resilient, as evidenced by the Ivey PMI holding above 50, but continued vulnerability in key sectors.

The Mexican peso fell to 20.9 per US dollar, the weakest since March 2022, as a sharp escalation in the trade war between the US and China shook global markets and increased pressure on emerging economies such as Mexico, where external demand and US growth are critical pillars.

Equity markets in Europe were mostly up on Tuesday. Germany’s DAX (DE40) rose by 2.48%, France’s CAC 40 (FR40) closed 2.50% higher, Spain’s IBEX 35 (ES35) gained 2.37%, and the UK’s FTSE 100 (UK100) closed 2.71% higher. European stocks bounced back on Tuesday after the worst four-day drop since the pandemic, sparked by concerns over US tariffs. The rebound was fueled by optimism that the US may soften its stance on tariffs as negotiations are underway. However, despite the recovery, trade tensions remain elevated. EU officials have said they are prepared to take a wide range of retaliatory measures, including possible digital taxes, and have warned of 25% tariffs on selected US goods. Trump has rejected a proposed zero-for-zero agreement on industrial tariffs, keeping tensions high.

On Tuesday, WTI crude futures fell more than 3% to below $59 a barrel, a four-year low, as President Trump confirmed that tariffs on China will rise to 104% from Wednesday, adding to fears of a global recession. While hopes briefly rose on reports that the US may reduce or eliminate tariffs with some countries, including South Korea, lack of progress in broader trade talks and escalating tariffs caused markets to reassess the outlook for global demand. Additional pressure came from a planned OPEC+ production increase in May, price cuts by Saudi Arabia, and rising geopolitical tensions, including Trump’s comments on direct talks with Iran.

Asian markets were predominantly down yesterday. Japan’s Nikkei 225 (JP225) gained 6.03% yesterday, China’s FTSE China A50 (CHA50) added 2.09%, Hong Kong’s Hang Seng (HK50) bounced 1.51% and Australia’s ASX 200 (AU200) was positive 2.27%.

The Reserve Bank of New Zealand cut the official money rate by 25 bps to 3.5% for the fifth consecutive meeting, citing a steady decline in inflation and weakening domestic economic conditions. The Central Bank also warned of the risks of weakening competitiveness of New Zealand’s export-oriented economy due to global trade barriers. In addition, the currency remains vulnerable to concerns that US President Donald Trump’s tariff policies could cause economic damage globally, especially to China, New Zealand’s largest export market.

The Reserve Bank of India (RBI) cut its key repo rate by 25 bps to 6% at its April meeting, marking consecutive rate cuts of the same magnitude and in line with market expectations. On the economic outlook, the RBI slightly lowered its GDP growth projections for FY 2025/26 to 6.5% from 6.7%. The quarterly growth expectations are 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4. The inflation estimate has been revised downward to 4% from 4.2%, remaining within RBI’s target range of 2-6%.