MARKET WRAPS
Watch For:
Manufacturing PMI data from EU, U.K., Germany, France, Italy; EU unemployment, flash estimate euro area inflation; U.K. Nationwide house price index; trading update from Travis Perkins
Opening Call:
European stock futures were higher early Tuesday, tracking broad gains in Asian stock benchmarks. The dollar and Treasury yields fell; oil futures and gold gained.
Equities:
Stock futures pointed to slight gains in Europe, as investors await what President Trump has dubbed ‘Liberation Day,’ when he announces yet more tariffs on April 2.
“Markets are clearly very jittery” ahead of this tariff announcement, NAB’s Tapas Strickland said. It seems that the tariffs could be broader than just the ‘dirty 15’ that had excited the markets last week, while industry-specific tariffs were also being discussed, the head of Market Economics said.
U.S. stocks began the first quarter with a bang at the start of the Trump administration but ended with a whimper as all three major indexes lost ground. U.S. stocks still have the potential to rise by the end of 2025, as a robust labor market suggests that consumer spending should be strong in the coming months, UBS strategists said.
However, U.S. stocks may be weighed near term by the tariff uncertainty. “We have been advising investors to brace for heightened market volatility in the weeks ahead,” they said.
Forex:
The U.S. dollar weakened early Tuesday. The recent narrative that the dollar has lost its safe-haven status looks unjustified, HSBC forex analyst Paul Mackel said.
The rally in gold prices could be “stealing some of the dollar’s thunder” in relation to safe-haven flows, he said. Market nervousness may not be intense enough to boost the dollar.
However, “the dollar remains a central feature of the global market infrastructure and if growth fears become pronounced, then the demand for the currency will likely intensify.”
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Sterling looks well placed ahead of U.S. reciprocal tariffs on Wednesday given the U.K.’s low exposure to such levies, Ebury economist Enrique Diaz-Alvarez said.
“The combination of steadying growth, resilience to tariffs and better ties with the EU remains the key supportive factor for sterling.”
Sterling should also receive support from the Bank of England likely remaining cautious about cutting interest rates in view of elevated U.K. services inflation.
Bonds:
Demand for U.S. investment-grade bonds is starting to decline as investors lower their Federal Reserve interest rate cut expectations, Bank of America credit strategists said. Investors now price in “a smaller likelihood of Fed rate cuts away from recessionary scenarios,” they said.
The supply of new U.S. investment-grade bonds is expected to rise in 2025, and combined with reduced Fed rate cut expectations, these factors are likely to limit demand for U.S. IG bonds, BofA said. Markets price in a total of 77 basis points of Fed rate cuts by the end of 2025, according to LSEG data.
Energy:
Oil futures rose but may face a possible technical correction after posting sharp gains overnight. Oil prices jumped on Monday after President Trump’s threat of possible tariffs on countries that buy Russian crude and his mention of a possible strike against Iran.
“If the U.S. does ultimately follow through with action against Iran, much of the weakness in crude since the beginning of the year will be unwound,” IG’s chief market analyst Chris Beauchamp said.
Metals:
Gold edged higher on prospects of broader and higher U.S. tariffs that would enhance the safe-haven allure of the precious metal. Recently, President Trump has pressured his team to be more aggressive on tariffs, encouraging the team to devise plans that would apply higher rates of tariffs on a broader set of countries, the WSJ reported.
Gold starts 2Q from a historically strong position, underpinned by economic and geopolitical conditions that fully justify its current appeal, Pepperstone said.
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Copper advanced on tailwinds, including relatively positive economic data in China, ANZ research analysts say in a commentary. Manufacturing activity expanded in March, with the official manufacturing purchasing managers index at 50.5, the analysts noted. Still, concerns over tariffs and a sell-off in global equity markets may weigh on sentiment, they added.
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Iron ore prices gained amid positive demand. Chinese steel mill production is active during peak season, Baocheng Futures said. The average daily molten iron ore production and imported iron ore consumption at sample steel mills were both strong last week, providing support for the ferrous metal’s prices, it notes.
However, ANZ Research analysts note that China’s new home sales fell 11% in March on year, which suggests the property market’s recovery remains fragile.
TODAY’S TOP HEADLINES
Trump Says He Settled on ‘Liberation Day’ Tariff Plan, but Doesn’t Reveal It
WASHINGTON-President Trump said that he had settled on a plan for his latest batch of tariffs expected this week but didn’t reveal what he had decided, after his economic team struggled to coalesce around a remade U.S. trade strategy.
“I’ve settled, yeah,” Trump said in the Oval Office on Monday evening when asked whether he has decided on his “Liberation Day” plans, a term the president has used for tariffs to be announced by the self-imposed deadline of Wednesday.
China Manufacturing Activity Gauge Shows Continued Expansion
A private gauge showed China’s manufacturing activity expanding at the fastest pace in four months, as production accelerated on the back of a sustained rise in new orders.
The China Caixin manufacturing purchasing managers index rose to 51.2 in March from 50.8 in February, according to data released Tuesday by Caixin Media Co. and S&P Global.
Zuckerberg Tries to Enlist Trump in Fight Against Meta EU Ruling
Mark Zuckerberg was quick to jump on board with President Trump earlier this year. Now he is calling in a favor.
After Trump’s election, the Meta Platforms chief executive embraced the incoming president’s priorities. He scrapped Meta’s diversity team, ended its fact-checking program, and appointed UFC President Dana White, a Trump ally, to its board. Clad in a maroon tie, Zuckerberg was among several Silicon Valley CEOs present for Trump’s inauguration.
Le Pen Verdict Fuels Claims That Europe’s Elites Are Colluding Against Populists
Leaders of the U.S. and Europe are increasingly at odds over a key aspect of democracy: How far should the courts go in constraining the power of elected politicians and should those decisions be allowed to undermine the will of voters?
That conflict is sure to deepen after Monday’s decision by a French court found nationalist Marine Le Pen guilty of embezzlement and barred her from politics for five years, making it unlikely she can take part in 2027 presidential elections, when she was expected to be the front-runner, unless she can win a swift appeal.
Trump Plans to Visit Saudi Arabia, Qatar in First Foreign Trip
WASHINGTON-President Trump is planning to visit Saudi Arabia, Qatar and potentially the United Arab Emirates in the coming weeks, though he said that plans are still being finalized.
“I have a very good relationship with the Middle East,” Trump said on Monday in the Oval Office. On timing, he said, “It could be next month, maybe a little bit later.”
SoftBank Group Agrees to Lead $40 Billion Funding for OpenAI
SoftBank Group has agreed to lead a funding of up to $40 billion in a for-profit subsidiary of OpenAI, valuing the ChatGPT maker at $300 billion.
The Japanese technology investment company said Tuesday that it planned to invest up to $30 billion in OpenAI Global and syndicate the remaining $10 billion to co-investors.
Intel’s New CEO Plots Turnaround; ‘We Need to Improve’
Intel has a lot of hard work ahead, Chief Executive Officer Lip-Bu Tan said.
Tan, who was named as the semiconductor company’s new CEO earlier in March, said conversations with customers have taught him that Intel strayed too far from the industry’s needs and fell behind its competitors when it came to innovation.
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Expected Major Events for Tuesday
00:01/IRL: Mar Ireland Manufacturing PMI
04:30/NED: Feb Retail turnover
04:30/NED: Mar Flash Estimate CPI
05:00/NED: Mar Netherlands Manufacturing PMI
06:00/UK: Mar Nationwide House Price Index
06:00/POL: Mar Poland Manufacturing PMI
06:30/SWI: Feb Retail Sales
07:00/CZE: 4Q LFSS Employment & Unemployment
07:15/SPN: Mar Spain Manufacturing PMI
07:30/CZE: Mar Czech Republic Manufacturing PMI
07:30/SWI: Mar procure.ch Purchasing Managers’ Index
07:45/ITA: Mar Italy Manufacturing PMI
07:50/FRA: Mar France Manufacturing PMI
07:55/GER: Mar Germany Manufacturing PMI
08:00/GRE: Mar Greece Manufacturing PMI
08:00/EU: Mar Eurozone Manufacturing PMI
08:00/ITA: Feb Unemployment
08:30/UK: Mar S&P Global UK Manufacturing PMI
09:00/GRE: Feb Labour Force Survey
09:00/EU: Feb Unemployment
09:00/EU: Mar Flash Estimate euro area inflation
15:59/UKR: Feb Industrial Production
16:59/AUT: Mar Unemployment figures
All times in GMT. Powered by Onclusive and Dow Jones.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
04-01-25 0014ET
