InvestMacro

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%.

The US economy added 228,000 jobs in March 2025, well above the downwardly revised 117,000 in February and above expectations of 135,000. This is the highest rate in the last three months. Despite the positive Non-Farm Payrolls report, all investors’ attention was focused on escalating trade tensions. At the end of Friday, the Dow Jones Index (US30) fell by 5.50% (-7.41% for the week). The S&P 500 Index (US500) was down 5.97% (-8.21% for the week). The Nasdaq Technology Index (US100) fell by 6.07% (-8.43% for the week). The decline in US markets intensified on Friday as China retaliated against President Donald Trump’s imposition of 10% import duties, adding to fears of a prolonged trade war. The S&P 500 Index fell nearly 9% for the week, the worst weekly drop since 2020, and global markets also fell hard. Trump’s tariffs, which will be expanded on April 9, are expected to reduce global trade, and some analysts have warned of recession risk. Over the weekend, President Trump continued to defend his tariff strategy, signaling on Truth Social that he is not worried about market turmoil. He argued that foreign investors are flocking to the US and insisted that his policies “will never change.”

Trump extended the deadline for ByteDance to sell its US operations to TikTok by 75 days, pushing it back to mid-June. The president said more time was needed to finalize approvals, but emphasized that national security issues remain. ByteDance has confirmed it is in talks with the US government, while Amazon.com Inc (AMZN), Oracle Corporation (ORCL), and Applovin Corp (APP) have expressed interest in acquiring the app’s US assets. Any updates on this front could add another layer of volatility to a market already plagued by geopolitical uncertainty.

The Canadian dollar (CAD) weakened to $1.42 amid signs of a fragile domestic economy and growing foreign trade uncertainty. Domestically, a loss of 32,600 jobs in March and a rise in unemployment to 6.7% indicate a weakening labor market, dampening the economic outlook. At the same time, crude oil prices — a key support for the commodity-linked Lonnie — fell more than 7%. With the Bank of Canada due to review its policy on April 16, expectations of a continued dovish stance amid recession fears intensified.

The Mexican peso (MXN) weakened to 20.5 per US dollar, nearing a three-year low of 20.85, which has been tested repeatedly since early 2025, as escalating global trade tensions and persistent domestic inflationary pressures reduce its appeal. At the same time, lingering uncertainty over Mexico’s potential exposure to US auto tariffs continues to cloud the outlook. Domestically, inflation remains uncomfortably high, complicating Banxico’s policy trajectory as it balances the need to maintain an attractive interest rate differential with the growing need to support slowing economic activity.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) was down 4.95% (for the week -7.24%), France’s CAC 40 (FR 40) fell by 4.26% (for the week -7.32%), Spain’s IBEX 35 (ES35) lost 5.83% (for the week -6.08%), and the UK’s FTSE 100 (UK100) closed down 4.95% (for the week -6.97%). European stocks fell on Friday as investors recovered from new US tariffs and growing recession fears. Banks led the losses, plunged 8.5% after falling 5.5% on Thursday, amid concerns about slowing growth. EU officials said Friday that talks with the US were “frank” but warned that the bloc was “ready to defend interests” if necessary.

WTI crude prices fell 7.4% to $62 a barrel — the lowest level since August 2021 — after falling 6.6% the previous day amid growing concerns about a slowing global economy and weakening oil demand. Investor sentiment is increasingly weakened by an escalating trade war, especially with China’s impending imposition of 34% tariffs on US goods. Recession risks and uncertainty over global trade are adding to worries.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) was down 7.30% for the week, China’s FTSE China A50 (CHA50) lost 1.02%, Hong Kong’s Hang Seng (HK50) decreased by 3.48%, and Australia’s ASX 200 (AU200) was negative 3.94%. Shares in Hong Kong fell by 9.4% in early trading on Monday, marking a second session of sharp losses and hitting a two-month low. The collapse reflected widespread panic across all sectors as investors fled risky assets amid an escalating global trade war and rising recession fears.

Nominal wages in Japan rose by 3.1% year-on-year in February 2025, up from a downwardly revised 1.8% increase in January, in line with market expectations. While strong nominal wage growth has supported the BoJ’s recent move towards policy normalization, rising global uncertainty clouds the outlook for further interest rate hikes.

Vietnam’s annual inflation rate accelerated to 3.13% in March 2025 from February’s three-month low of 2.91%. The increase was driven by higher inflation in food and beverage services (3.83% vs. 3.31% in February).