Investor uncertainty marked the market movements earlier this week, following President Trump’s tariff pronouncements last week. U.S. treasury yields jumped in response to selling pressure in the treasury markets. Subsequently, Trump announced a pause to the reciprocal tariffs on Wednesday. China, Canada, and Mexico tariffs were excluded from the pause. Global markets staged a recovery rally in response, though some uncertainty persisted. The U.S. dollar significantly depreciated this week, even as the Euro, Swiss Franc, and Yen appreciated. Canadian Prime Minister Mark Carney continues to lead his opponent Pierre Poilievre in opinion polls. Carney imposed a 25% tariff on U.S. cars, and China raised its tariffs to 125%. Taiwan became the first country to initiate trade talks with the U.S. after the tariff reprieve. Iran-U.S. Nuclear program talks will commence on Saturday in Oman. President Trump’s diplomatic envoy Steve Witkoff will be meeting President Putin in Russia.

Global Updates
  • The MSCI All Country World Index recovered from an initial drop in global equity markets after the 90-day pause on the new Trump tariffs drove up investor sentiments. President Trump paused the tariff hikes on most countries while maintaining the base 10% tariff on those countries. Tariffs imposed on China, Canada, and Mexico were continued. The counter-tariffs on the U.S. planned by the European Union (E.U.) were also paused. European and Asian markets registered partial gains following this news. European Central Bank President Christine Lagarde has reiterated the bank’s willingness to deploy instruments for market stability
  • The U.K.’s annual GDP growth rate for February beat expectations, coming in at 1.4%.
  • The annual inflation in the EU eased to 2.2% in March due to a decline in energy and services costs.
  • China raised its tariffs on U.S. goods to 125%, escalating from 84% last Friday. The U.S. had raised the levies on Chinese goods to 145% last week. China also filed a supplementary complaint with the World Trade Organization, regarding the Trump tariffs.
  • China property sector behemoth Country Garden has received approval from a major bondholder group for its debt restructuring plan. 
  • Gold price surged past the $3,200 per ounce mark this week, driven by global uncertainties. Mining stocks have also benefited from the safe haven demand for precious metals.
  • Saudi Arabia’s state oil firm Aramco has slashed its official selling price for May to $1.2 per barrel. China has raised its crude purchases for May due to price effects.
  • Taiwan plans to include a $200 billion Natural Gas purchase agreement in its trade talks with the U.S. Taiwan President Lai Ching-te has in principle agreed to a zero tariff regime with the U.S.
  • Taiwan Semiconductor Manufacturing Co (TSMC) reported a larger-than-expected 42% jump in its first quarter revenue to $25.6 billion, despite the market volatility. 
  • India’s Reserve Bank of India lowered its key repo rate by 25 bps to 6% this week to support economic growth and borrowing.
U.S. Equity
  • The S&P 500, Dow Jones, and Nasdaq indices ended the week higher after a week of significant movements. The markets started the week lower, responding to larger-than-expected reciprocal tariffs announced on April 2 by President Trump. This included a major selloff in U.S. treasuries. On Wednesday, markets recovered after President Trump announced a pause in tariffs on most countries. Some uncertainty continued to pressure equity and bond markets despite the tariffs in limbo, including the drop in the U.S. dollar to 3 year lows. Taiwan became one of the first nations to initiate trade talks with the U.S. following the sweeping tariffs announced by the U.S. last week. 
  • Goldman Sachs lowered its U.S. GDP growth estimate to 1.3% for 2025, citing the economic slowdown expected due to supply chain disruptions, uncertainty and inflation. Goldman analysts also raised the probability of a recession in 2025 by 10 percentage points to 45%. Analysts now expect the Federal Reserve to advance its schedule for rate cuts to June, to counter the ongoing economic slowdown. 
  • Barclays lowered the price target on Charles River Laboratories in light of potential pharmaceutical tariffs.
  • Delta Airlines reported better than expected first-quarter outcomes. Delta registered a higher-than-expected EPS of $0.46 on a $14.04 billion operating revenue. The airline’s CEO Ed Bastian withdrew the full year forecasts issued earlier in the year, citing stalled growth in the sector due to economic uncertainty. 
  • U.S. Steel stock price was down after President Trump reiterated his opposition to a foreign ownership of U.S. Steel. This has jeopardized the takeover bid by Nippon Steel. 
  • Carmax, the retailer of used cars, reported lower than expected fourth quarter outcomes of EPS of $0.58 and $6 billion in operating revenues. Carmax has not issued any long term targets and stepped away from the ones previously issued.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index recovered after initially declining this week.
  • The U.S. 10-year Treasury yield rose sharply to 4.413%, and the yield on the 2-year note rose to 3.810% over the week. 
  • The U.S. Dollar Index sharply depreciated to a three-year low reading of 99.31 this week, even as the Euro, Swiss Franc and the Yen continued to appreciate to six-month highs.

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