June S&P 500 E-Mini futures (ESM25) are up +1.50%, and June Nasdaq 100 E-Mini futures (NQM25) are up +1.28% this morning, pointing to a modest recovery on Wall Street as investors seek dip-buying opportunities while waiting for clarity on how U.S. President Donald Trump’s trade policies will play out.
President Trump made a series of remarks on Monday regarding his proposed tariffs on global trading partners. However, he provided scant detail about what he wants in return for reducing tariffs or whether he intends to offer any relief at all. Investors took some comfort after Japan pushed ahead with talks on a potential tariff deal.
In yesterday’s trading session, Wall Street’s main stock indexes ended mixed. Some of the Magnificent Seven stocks continued to fall, with Apple (AAPL) dropping over -3% and Tesla (TSLA) slumping more than -2%. Also, energy stocks tumbled after the price of WTI crude fell to a 4-year low, with Schlumberger (SLB) and Occidental Petroleum (OXY) sliding over -4%. In addition, Caterpillar (CAT) fell more than -2% after UBS downgraded the stock to Sell from Neutral with a price target of $243. On the bullish side, chip stocks gained ground, with Broadcom (AVGO) and Micron Technology (MU) climbing over +5%.
Economic data released on Monday showed that U.S. consumer credit unexpectedly fell -$0.81B in February, weaker than expectations of +$15.20B.
Fed Governor Adriana Kugler stated on Monday that President Trump’s trade policy currently has more significant implications for inflation than for economic growth. Kugler said that consumers’ actions to buy goods before recently announced tariffs take effect may be bolstering economic activity in early 2025, while there are indications that the trade policy changes are beginning to exert upward pressure on prices. “The takeaway is that I view, right now, inflation as being more pressing as far as the effects of tariffs that we’re already seeing,” she said. Kugler also noted that policymakers “have to be very careful in how we navigate this period.”
Chicago Fed President Austan Goolsbee said during an interview on CNN, “The anxiety is if these tariffs are as big as what are threatened on the U.S. side, and if there’s massive retaliation, and then if there’s counter retaliation again, it might send us back to the kind of conditions that we saw in ‘21 and ‘22, when inflation’s raging out of control.”
U.S. rate futures have priced in a 71.4% probability of no rate change and a 28.6% chance of a 25 basis point rate cut at the next FOMC meeting in May.
Meanwhile, market watchers are keenly awaiting U.S. inflation data, the Fed’s minutes from the March meeting, and the start of the first-quarter earnings season this week.
Investors also continue to assess the potential economic impact of Trump’s tariffs and remain alert for any announcements of retaliatory measures. On Friday, China retaliated against new U.S. tariffs by imposing a 34% tariff on all U.S. imports beginning April 10th. Trump on Monday threatened to slap “ADDITIONAL Tariffs on China of 50%, effective April 9th,” if Beijing fails to retract its retaliatory tariffs by April 8th.
“For now, it looks like news out of Washington will continue to drive the market’s swings, one way or the other. Some notable lows over the past few decades have been preceded by similar levels of volatility, although it’s always impossible to know when prices will eventually find their bottom,” said Chris Larkin at E*Trade from Morgan Stanley.
The U.S. economic data slate is largely empty on Tuesday. However, investors will focus on a speech from San Francisco Fed President Mary Daly.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.170%, up +0.31%.
The Euro Stoxx 50 Index is up +1.00% this morning, snapping a 4-day losing streak, though investor sentiment remained fragile amid ongoing tariff-related concerns. Defense and travel stocks outperformed on Tuesday. Still, trade uncertainty remained high, with European Commission President Ursula von der Leyen confirming that the European Union had proposed a “zero-for-zero tariffs” agreement on industrial goods to Trump, which he rejected. On Monday, the European Commission proposed 25% counter-tariffs on a variety of U.S. goods as the bloc grapples with existing auto and metal duties and braces for a 20% levy on other products set to take effect Wednesday. EU finance ministers are set to discuss ways to address the anticipated hit to Europe’s economic growth from U.S. tariffs later this week. Meanwhile, ECB policymaker Yannis Stournaras stated on Tuesday that anticipated higher inflation and a global trade war triggered by Trump’s tariffs could postpone the normalization of the Eurozone’s monetary policy. In corporate news, Infineon Technologies AG (IFX.D.DX) slid nearly -1% after the German chipmaker agreed to buy Marvell Technology’s automotive ethernet business for about $2.5 billion in cash.
The European economic data slate is mainly empty on Tuesday.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +1.58%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +6.03%.
China’s Shanghai Composite Index ended higher today, partially recovering from yesterday’s selloff as sentiment improved following the government’s robust response to U.S. President Donald Trump’s tariff threats. Consumer-related stocks led the gains on Tuesday. China pledged on Tuesday not to bow to “blackmail” from the U.S. after Trump announced he would impose an additional 50% tariff on U.S. imports from the country on Wednesday, in retaliation for Beijing’s move to match the duties Trump introduced last week. “If the U.S. insists on its own way, China will fight to the end,” the Chinese Ministry of Commerce said. Meanwhile, in signs that Beijing is preparing for extended trade tensions, its state-backed funds committed to purchasing domestic equities and exchange-traded funds. Sovereign fund Central Huijin Investment, known as the “national team,” said it has purchased China-listed stocks through exchange-traded funds and pledged to further boost its holdings to “safeguard the smooth operation of the capital market.” Also, the People’s Bank of China said it would offer support to the sovereign fund whenever needed to ensure the stability of capital markets. In addition, multiple Chinese state-owned enterprises pledged on Tuesday to ramp up their investments in shares, while numerous publicly traded companies unveiled share buyback plans to help stabilize prices. In other news, state-run broadcaster China Central Television reported on Monday that Chinese President Xi Jinping has urged efforts to “fully unleash” consumption to counter the impact of tariffs. In corporate news, BYD Co. climbed over +4% in Hong Kong after the auto giant said its Q1 net income would grow 86%-118.9% year-over-year.
Japan’s Nikkei 225 Stock Index closed higher today following a call between Prime Minister Shigeru Ishiba and U.S. President Donald Trump, which ignited hopes for a tariff deal. The benchmark index recovered most of its previous day’s losses amid optimism that Japan could secure a trade agreement with the U.S. to avoid a 24% tariff as the Wednesday deadline loomed. Trump directed two cabinet members to initiate bilateral trade discussions following a call with Ishiba. Japan looked poised to receive priority in U.S. tariff negotiations, stepping ahead of numerous nations aiming to reverse Trump’s reciprocal tariffs. Electronics and financial stocks led the gains on Tuesday. Data released on Tuesday showed that the gauge for Japan’s service sector fell to over a 2-1/2-year low in March. Meanwhile, Japan’s finance minister, Katsunobu Kato, vowed on Tuesday to take all necessary steps to address the impact of Trump’s higher tariffs, including financial support for Japanese businesses impacted by the U.S. decision. “The finance ministry and the Financial Services Agency will conduct necessary analysis at their task force and cooperate with relevant ministries to ensure that we are fully prepared to respond to the U.S. tariff measures,” Kato said at a news conference. In other news, Reuters reported that Japan’s government plans to present a nominee to parliament on Thursday for a Bank of Japan board seat that will become vacant at the end of June. In corporate news, cable maker Fujikura, a key indicator for data center investments, soared over +19% to lead gainers in the Nikkei 225. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -19.52% to 46.99.
The Japanese February Current Account n.s.a. came in at 4.061T yen, stronger than expectations of 3.800T yen.
The Japanese March Economy Watchers Current Index stood at 45.1, in line with expectations.
Pre-Market U.S. Stock Movers
Broadcom (AVGO) rose over +3% in pre-market trading after announcing up to a $10 billion share repurchase program.
Levi Strauss (LEVI) surged more than +10% in pre-market trading after the apparel seller posted better-than-expected Q1 adjusted EPS and reaffirmed its full-year guidance.
Health insurers Humana (HUM), CVS Health (CVS), and UnitedHealth (UNH) climbed over +5% in pre-market trading following the federal government’s announcement of an estimated $25 billion increase in payments to 2026 Medicare Advantage health plans.
Ross Stores (ROST) gained more than +1% in pre-market trading after Wells Fargo upgraded the stock to Overweight from Equal Weight with a price target of $150.
Charles Schwab (SCHW) advanced over +2% in pre-market trading after Morgan Stanley upgraded the stock to Overweight from Equal Weight.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - April 8th
RPM (RPM), Cal-Maine (CALM), WD-40 (WDFC), Tilray (TLRY), Kura Sushi (KRUS), Mama’s Creations (MAMA), Aehr Test Systems (AEHR).
