The announcement of sweeping tariffs by President Trump on April 2 plunged the global markets into chaos. Treasury yields also dropped as fixed income asset market activity increased. Analysts now have projected a higher risk of inflation and recession in the current year. In the short-term disruptions in the global supply chains are expected. The downstream effects on households, industries and employment are still being estimated.

A French court convicted French right wing political leader Marine Le Pen for embezzlement and barred her from running for any public office over the next five years. The decision was strongly criticized by world leaders. President Trump has expressed his disappointment with President Putin and President Zelenskyy, following their actions week which could possibly have undermined the ceasefire efforts. Israel continued its operations in Gaza this week.

Global Updates
  • The MSCI All Country World Index plunged this week following the ‘Liberation Day’ tariff declaration by President Trump. Global equity markets have dropped, even as investors estimate the impact these tariffs will have on trade, economic growth, investments and corporate earnings.
  • Canada has imposed a retaliatory 25% tariff on auto imports from the U.S.; despite Canada and Mexico being exempted from U.S. tariffs on April 2.
  • Canada and European countries have expressed their willingness to increase defence spending but not to the levels Trump expects.
  • Canadian Conservative Party Leader Pierre Poilievre has a proposed a tax break for capital gains reinvested in Canadian businesses.
  • Gold price dropped slightly to $3,107 this week due to price taking by sellers, even though precious metals were excluded from the Trump tariffs. The safe haven demand for gold and silver is expected to rise in the coming weeks.
  • China has imposed an additional 34% tariff on U.S. imports following the U.S. raising the cumulative duty on Chinese products to 54%.
  • Oil Prices also dropped sharply this week on the expectation of a global trade war which would hurt the demand for crude oil. The plans of OPEC+ to increase output from April will likely create oversupply in the market.
  • Taiwan has unveiled a $2.67 billion assistance program for companies impacted by the Trump tariffs including its electronics and steel companies.
U.S. Equity
  • The S&P 500, Dow Jones and Nasdaq indices ended the week lower following the sweeping reciprocals country and sector specific tariffs announced on April 2. These trade barriers are reported to be the highest in a century. President Trump exempted semiconductors, lumber, copper, gold, and pharmaceuticals from these tariffs. No new tariffs were imposed on Mexico and Canada too. The tariffs will be rolled out in two stages. In the first phase a 10% baseline tariff will be imposed on April 5. This will be followed by higher tariffs on April 9. President Trump has suggested that the tariffs can be negotiated down by the respective countries.
  • JP Morgan has raised the probability of a recession occurring within this year to 60%, following the tariff announcement on ‘Liberation Day’.
  • Goldman Sachs has lowered its year-end S&P 500 target for the second time this month to 5,700 from the previous estimates of 6,500 and 6,200 considering the fallout from President Trump’s tariff strategy.
  • The JOLTS employment data has indicated that job openings declined to 7.56 million in February. However, the U.S. Labor Department reported a higher-than-expected increase of 228,000 jobs in the non-farm payrolls data for March.
  • Concurrently, the U.S. Core Personal Consumption Expenditure (PCE) growth for February came in at 0.4%. The annual core PCE estimate was higher than expected at 2.8% in February.
  • The ISM PMI reading of 49 for March indicated that the U.S. manufacturing sector entered a contractionary phase in March due to a drop in new orders.
  • Tesla has reported its weakest quarterly sales in three years, in the first quarter of 2025. Tesla’s sales dropped by 13% to 336,681 units, due to global competition from BYD, Volkswagen, and BMW.
  • The Trump administration is reportedly nearing a decision on the ownership structure for the acquisition of TikTok before the deadline date on April 5th. If a acquisition deal is not settled by the deadline date, TikTok would have to shut down its U.S. operations.
  • Stocks of computer hardware companies including Dell Technologies, Western Digital and HP have dropped, owing to the expectation of higher costs due to their dependence on global supply chains. Chipmakers like Nvidia, Intel, etc. were similarly affected.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index was jumped this week.
  • The U.S. 10-year Treasury yield dropped to 4.053% and the yield on the 2-year note to 725% over the week.
  • The U.S. Dollar Index sharply depreciated to 102.10 this week while the Euro and Yen appreciated to six-month highs.

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