Highlights:
The way to make the markets cheerful about a 10% tariff is to start from a 245% tariff rate. U.S. equities surged during the week, with the S&P 500 advancing by over 4.5% and the Nasdaq Composite gaining 6.43% from the previous week’s close. Several reports emerged within the week indicating that the ongoing trade tensions between the U.S. and China could be de-escalating. Similarly, President Trump’s apparent walking back of earlier threats to fire the Fed Chair Jerome Powell added to the optimism in the markets boosting expectations that the worst-case scenario may be avoidable. In addition to this, a slew of better-than-expected corporate earnings releases added on to the positive sentiment as 73% of the companies that had reported first-quarter results through Friday morning had beaten earnings expectations. The positive cheer was mirrored in Europe as the pan-European Euro Stoxx 600 was up 3.76% in the week. European Central Bank (ECB) Chief Economist Philip Lane told Bloomberg News that tariff uncertainty would curb economic growth, but a recession was unlikely given the bloc’s diversified trading relationships. However, the German government cut its growth forecast and now expects stagnations as opposed to the 0.3% expansion expected in January in light of the impact of the U.S. trade tariffs on the export-focused nation. Meanwhile, mainland Chinese stock market advanced for the week as expectations were high that the government would roll out more stimulus measures to cushion China’s economy from the impact of the U.S. tariffs. On Friday, China’s Politburo—the ruling Communist Party’s 24-member executive policymaking body—said it would “fully prepare” emergency plans in response to external shocks.
Data highlights:
In Canada, retail sales YoY in February was reported at 4.7% lower than the 5.3% reported previously. In the Eurozone, the government debt to GDP ratio was at 87.4% in 2024, a slight increase compared to 87.3% in 2023. The balance of trade February 2025 report showed a €24 billion surplus in trade in goods with the rest of the world. An increase compared to €21.7 billion in February 2024. Retail sales YoY in the UK, grew to 2.6% in March from a revised 1.8% in February. This was higher than the 1.8% expectation by analysts.
Week ahead:
Japan Retail Sales YoY, Australia Inflation Rate YoY, Eurozone GDP Growth Rate YoY, U.S GDP Growth Rate Q1 – Wednesday | Japan BOJ Interest Rate Decision – Thursday | Eurozone Unemployment Rate, U.S Non-Farm Payroll – Friday
