Shares Edge Up on Some Tariff Reprieve, US Bonds Steady

Economic

Summary:

European and Asian shares rose as Trump hinted at easing auto tariffs, boosting sentiment after recent market turmoil. Bond yields steadied and oil, gold, and U.S. futures also gained.

European and Asian shares rose on Tuesday after U.S. President Donald Trump touted possible tariff changes on autos, while U.S. Treasuries steadied having staged a recovery the day before following last week's historic selloff.

Trump said on Monday he was considering a modification to the 25% tariffs imposed on foreign auto and auto parts imports from Mexico, Canada and other places.

That followed Friday's move to exempt smartphones, computers and some other electronics from Trump's "reciprocal" tariffs.

"Markets have been itching for any signs of positivity," said Dan Boardman-Weston, CEO and CIO at BRI Wealth Management.

"The announcement about electronics and phones over the weekend was helpful for sentiment and you've seen markets rally a bit in the last few days."

Investors took whatever good news they could get after the recent heavy selling across markets, and pushed shares higher.

The pan-European STOXX 600 index rose 0.8% on Tuesday, led by the autos and parts sector whose gauge jumped 2.6%.

Germany's DAX <.GDAXI rose 1.3% and Britain's FTSE 100 index jumped 0.8%. France's CAC 40 was little changed, weighed by the luxury sector after disappointing earnings from LVMH.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan was up 1%.

Japan's Nikkei rose 0.8%, with shares of auto companies like Toyota and auto parts maker Denso among the top gainers.

"When we start to see some of these exemptions flow through for particular sectors, it helps markets think about tariffs as something that aren't necessarily going to be all-encompassing, and that they might actually be reprieved," said Illiana Jain, an economist at Westpac.

Analysts remained cautious, however, as uncertainty over Trump's trade policies, and his constant back-and-forth on tariffs, continued to cast a cloud over markets and the global economic outlook.

U.S. futures swung between losses and gains to last trade marginally higher after Monday's advance on Wall Street, its second straight daily rise for the first time since Trump announced his reciprocal tariff plan on April 2.

OPEC+ countries have also increased their production

Nasdaq futures rose 0.4% and S&P 500 futures were up 0.3%.

Investors have more earnings to weather this week with Bank of America and Citigroup among the big banks reporting. Numbers from chipmaker TSMC later in the week will also be a highlight.

BOND YIELDS STEADY

U.S. Treasuries held onto Monday's gains on Tuesday after a manic selloff last week that led to the largest weekly increase in borrowing costs in decades. Bond yields move inversely to prices.

The benchmark 10-year yield was up 1 basis point (bp) at 4.372%, having fallen nearly 13 basis points in the previous session.

The two-year yield was up about 3 bps at 3.862% after sliding 12 bps on Monday.

Some analysts said comments from Federal Reserve Governor Christopher Waller contributed to the fall in yields.

He said on Monday that the Trump administration's tariff policies were a major shock to the U.S. economy that could lead the Fed to cut rates to head off recession even if inflation remained high.

Atlanta Fed Bank President Raphael Bostic, meanwhile, suggested the U.S. central bank should stay on hold until there is more clarity.

Markets are now pricing in about 83 bps worth of monetary policy easing by the end of the year, with most expecting the Fed to hold rates next month.

In currencies, the euro was close to its three-year peak against the dollar at $1.1362, as the U.S. unit remained under pressure.

The dollar was near its recent 10-year low against the Swiss franc and fell to a more than six-month low against the pound .

"(The) behaviour of the U.S. dollar recently has changed – it is now ignoring rate differentials, and responding more to capital flows," said Bharat Sachanandani, head of flow strategy and solutions for Asia Pacific at Societe Generale.

"The U.S. dollar is not liking the prospect of U.S. corporations being less profitable, U.S. consumers facing higher inflation and foreign investors having a collapsing appetite for U.S. assets."

Oil prices rose, boosted by the latest tariff exemptions floated by Trump. Brent crude futures gained 0.5% to $65.22 per barrel while U.S. crude was up 0.6% at $61.87.

Spot gold rose 0.5% to near its record high at $3,226 an ounce.

Source: Reuters

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Michelle

Economic

Stocks

Forex

Asian stocks rose on Tuesday, but futures hint at European and US market weakness as President Donald Trump hinted at possible exceptions to auto-related tariffs.

On Monday, Trump said he might adjust the 25% tariffs on imported cars and parts from countries like Mexico and Canada. These tariffs could make cars thousands of dollars more expensive, but Trump said car companies need some time to start manufacturing vehicles in the U.S.

Markets are stabilizing as the tech exemptions have given hope for possible negotiations after the president’s tariffs earlier this month caused global stocks to lose $10 trillion and triggered a sell-off in US Treasuries. However, the constant changes are making investors nervous, and business leaders, like JPMorgan’s Jamie Dimon, have warned that Trump’s attempt to change global trade rules could lead to a US recession.

U.S. Treasury bonds stabilized overnight after last week’s big sell-off, while the dollar continued losing popularity with investors.

Australia’s central bank was cautious about cutting interest rates further, saying May would be a good time to review its policies. This was mentioned in the minutes of its April meeting released in the Asian session. The April meeting was held just before President Trump’s tariffs disrupted global markets.

Gold prices continue to hold the high ground having seen a brief pullback yesterday met with renewed buying pressure. For a full breakdown on Gold, read: Gold (XAU/USD) price update: is price action pointing toward fresh highs? $3250 loading….?

Chart of the day – US Dollar index

From a technical standpoint, the US Dollar Index selloff could be running out of steam.

Yesterday’s failure by bears to print a fresh low and a daily candle close back above support may hint at the potential for a US Dollar rebound.

The 14-period RSI is eyeing a break back above the oversold 30 handle which could be seen as a sign of changing momentum.

A bullish move would be intriguing as the index will likely test the psychological 100 level, with acceptance needed if a sustained USD recovery is to take place.

The tariff shadow and uncertainty however, mean that such a recovery may struggle to gain traction just yet.

US Dollar Index (DXY) Chart, April 15, 2025

Source: TradingView.com (click to enlarge)

Support

99.56
99.00
97.70

Resistance

100.00
100.61
101.18

Source: ACTIONFOREX

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Warren Takunda

Stocks

Asian benchmarks mostly rose Tuesday, echoing a rally on Wall Street after President Donald Trump relaxed some of his tariffs, for now at least, and as stress from within the U.S. bond market seemed to be easing.

Japan’s benchmark Nikkei 225 surged 0.8% to 34,267.54.

Automakers were among the biggest gainers. Toyota Motor Corp. jumped 4.7%, while Honda Motor Co. gained 3.9%. Electronics and entertainment giant Sony Corp.’s stock price added 2.4%, while semiconductor maker Tokyo Electron rose 1.3%, while Renesas was up 1.5%.

Australia’s S&P/ASX 200 added 0.2% to 7,761.70 and South Korea’s Kospi gained 0.9% to 2,477.41.

Chinese shares wobbled, with Hong Kong’s Hang Seng slipping 0.3% to 21,364.72. The Shanghai Composite fell 0.2% to 3,257.72.

“You know the drill: one step forward, two steps back, then a whiplash pivot into carrot-and-stick diplomacy. It’s becoming the signature of this White House — deliver a policy gut punch, then soften the blow with selective reprieves or 90-day pauses. It’s market management by whack-a-mole,” said Stephen Innes, managing partner at SPI Asset Management.

On Monday, the S&P 500 climbed 0.8% to 5,405.97, though trading was still shaky. The Dow Jones Industrial Average rose 0.8% to 40,524.79, while the Nasdaq composite added 0.6% to 16,831.48.

Apple and other technology companies helped lift Wall Street after Trump said he was exempting smartphones, computers and other electronics from some of his stiff tariffs, which could ultimately more than double prices for U.S. customers of products coming from China. Such an exemption would mean U.S. importers don’t have to choose between passing on the higher costs to their customers or taking a hit to their own profits.

Apple climbed 2.2%, and Dell Technologies rose 4%.

Automakers also rallied after Trump suggested he may announce pauses on tariffs next for the auto industry. General Motors rose 3.5%, and Ford Motor rallied 4.1%.

But such relief may ultimately prove fleeting. Trump’s tariff rollout has been full of fits and starts, and he and officials in his administration have said the exemption on electronics is only temporary.

That means uncertainty for both consumers and companies, which are trying to make long-term plans when conditions seem to change by the day. Financial markets have endured chaotic and historic swings, as investors struggle to keep up with Trump’s moves on tariffs.

Perhaps more encouragingly for investors, the bond market has calmed following a bout of volatility last week.

Treasury yields usually drop when fear is high in the market because U.S. government bonds have historically been seen as some of the world’s safest investments. But last week, yields rose sharply for Treasury bonds in an usual move. The value of the U.S. dollar also fell against other currencies, suggesting investors may no longer see the United States as the best place to keep their cash during moments of stress.

Trump announced a 90-day pause on many of his tariffs last week, noting that investors in the bond market “were getting a little queasy.”

The yield on the 10-year Treasury had eased back to 4.35% as of early Tuesday. It had jumped to 4.48% on Friday from 4.01% the week before.

Yields sank after the bond market got an encouraging update on expectations for inflation among U.S. consumers. While U.S. households raised their expectations for inflation in the year ahead, their expectations for inflation three and five years in the future were either unchanged or lower, according to a survey by the Federal Reserve Bank of New York.

That’s potentially good news for the Federal Reserve, which hates to see fast-rising expectations for longer-term inflation. Such expectations could kick off a feedback loop that drives behavior among consumers that only worsens inflation.

In other dealings early Tuesday, benchmark U.S. crude rose 20 cents to $61.73 a barrel. Brent crude, the international standard, was up 18 cents to $65.06 a barrel.

The U.S. dollar rose to 143.09 Japanese yen from 143.04 yen. The euro cost $1.1346, down from $1.1351.

Source: AP

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Warren Takunda

Stocks

London stocks rose in early trade on Tuesday as investors mulled the latest UK jobs data and encouraging comments from US vice president JD Vance about the potential for a trade deal.

At 0830 BST, the FTSE 100 was up 0.4% at 8,170.15.

Vance said in an interview on Monday with UnHerd that there is a "good chance" the UK and the US can secure a trade deal.

"We’re certainly working very hard with Keir Starmer’s government," he said.

"The president really loves the United Kingdom. He loved the Queen. He admires and loves the King. It is a very important relationship. And he's a businessman and has a number of important business relationships in [Britain]. But I think it's much deeper than that.

"There's a real cultural affinity. And, of course, fundamentally, America is an Anglo country."

On the macro front, meanwhile, figures from the Office for National Statistics showed the unemployment rate was steady in February, while wage growth remained high.

The unemployment rate was unchanged at 4.4% in the three months to February.

The data also showed that growth in annual average weekly earnings excluding bonuses was 5.9%, slightly lower than consensus expectations for 6% growth. Growth in average earnings including bonuses was 5.6%, in line with expectations.

Liz McKeown, director of economic statistics at the ONS, said: "Regular pay growth remains strong having increased slightly in the latest period.

"Growth accelerated in the previous pay rises fully fed through to our headline figures, while pay in the private sector was little changed.

"The latest survey results estimate that the unemployment rate is unchanged on the previous three months, while separately the number of employees on payroll fell slightly over the same period."

Ashley Webb, UK economist at Capital Economics, said: "Overall, while wage growth remains too high, the growing downside risks to inflation and activity from higher US tariffs may mean the Bank of England starts to become less worried about the upside risks to inflation from pay growth and more worried about the downside risks to activity.

"The risk is that interest rates are cut a bit faster than the fall from 4.50% now to 4.00% this year that we expect."

In equity markets, Tate & Lyle rallied after saying it performed as expected in the fourth quarter and that its 2025 results will be in line with guidance.

FirstGroup was also in the black after it said that FY 2025 adjusted operating profit and adjusted earnings per share were set to be ahead of its previous expectations following a stronger financial performance in First Rail and an in-line performance at First Bus.

Discount retailer B&M European Value Retail racked up strong gains as it said adjusted operating profits should be above the mid-point of its guidance range for the year ended 29 March on the back of productivity gains and a pick-up in underlying sales growth in the fourth quarter.

Guidance for adjusted EBITDA was cut in February to £605m-625m, down from an earlier forecast of £620m to £650m.

In broker note action, Next was boosted by an upgrade to ‘buy’ at Goldman Sachs, while JD sports was higher after an upgrade to ‘euqalweight’ at Barclays.

Domino’s Pizza was hit by a downgrade to ‘underweight’ at Barclays.

Source: Sharecast

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Glendon

Commodity

LONDON (April 15): The International Energy Agency (IEA) on Tuesday sharply cut its forecast for the growth in global oil demand this year due to escalating trade tensions, a day after a similar move by producer group Opec.

"The deteriorating outlook for the global economy amid the sudden sharp escalation in trade tensions in early April has prompted a downgrade to our forecast for oil demand growth this year," the IEA, which advises industrialised countries, said in a monthly report.

"Growth is expected to slow further in 2026, to 690,000 bpd, as lower oil prices only partly offset the weaker economic environment."

Source: Theedgemarkets

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Michelle

Forex

Economic

China–U.S. Trade War

Global investment banks are lowering their projections for China's economic growth this year as U.S. President Donald Trump's aggressivetariffsare expected to take a toll on the world's second-largest economy.

Some of the banks had upgraded their forecasts for China just a month ago, encouraged by signs of improvement in the sputtering economy in the first two months of the year.

Sino-U.S. trade tensions have intensified after Trump announced reciprocal tariffs on April 2, leading to tit-for-tat duties on each other's goods. By April 11, China was all but under a U.S. trade embargo as tariffs rose to 145%.

Gross domestic product growth in the first quarter is forecast at 5.1% year-on-year, while full-year expansion is predicted to hit 4.5% in 2025, compared with last year's 5.0% pace, according to a Reuters poll, falling short of the official target of around 5.0%.

China is due to release its first-quarter GDP data and activity indicators on Wednesday.

Here is a summary of some forecasts for the China's GDP.

	NEW (PREVIOUS)
INVESTMENT HOUSE	2025	2026
CITI	4.2% (4.7%)
GOLDMAN SACHS	4% (4.5%)	3.5% (4%)
UBS	3.4% (4%)	3% (3%)

** In the previous factbox, some of the institutions raised their GDP forecast for this year following some early signs of economic recovery.

KEY QUOTES:

** UBS

"Under our current new baseline assumptions, we estimate tariff hikes this year to pose a more than two-percentage-point drag on China's GDP growth. We expect China's exports to the U.S. to fall by 2/3 in the coming quarters and its overall exports to fall by 10% in USD terms in 2025, the latter also takes into account slower U.S. and global growth.

While tariff exemptions will likely reduce the inflationary pressure somewhat in the U.S., we expect they are unlikely to affect importers' desire to find alternatives to imports from China. Therefore, we expect continued negative impact of the tariff hikes on China's exports in 2026."

** CITI

"We see little scope for a deal between the U.S. and China after recent escalations.

Domestic policies could focus more on demand expansion. We expect additional funding of 1 to 1.5 trillion yuan ($205 billion) while policy implementation accelerates. The People's Bank of China (PBOC) could cut policy rates by 40 basis points and reserve requirement ratio (RRR) by 100 basis points. Policy constraints such as the exchange rate and debt management could stay, however. With prolonged elevated uncertainties, policymakers could choose to keep more powder dry."

** GOLDMAN SACHS

"Recent events have underscored the speed with which President Trump can alter tariff rates, while also highlighting the likelihood that high tariffs on Chinese goods will persist.

We estimate that 10 to 20 million workers in China may be exposed to U.S.-bound exports. The combination of extremely high U.S. tariffs, sharply declining exports to the U.S., and a slowing global economy is expected to generate substantial pressures on the Chinese economy and labor market."

Source: TradingView

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Glendon

Economic

Forex

Unemployment held steady at 4.4%, where it has been since last November, while employment rose by a better-than-expected 206k on a rolling 3-month basis.

Meanwhile, earnings continued to increase at a rapid clip, albeit somewhat softer than consensus. Overall pay rose 5.6% YoY, and regular pay by 5.9% YoY over the same period. While one old hope that earnings pressures fade somewhat as the year progresses, this is by no means guaranteed, even if risks to the labour market are biased towards weakness, as the impacts of the National Insurance changes are felt from Q2 onwards. Right now, though, the current clip of pay growth is clearly incompatible with a sustainable return to the BoE's 2% inflation target over the medium-term.

In any case, though, policymakers on Threadneedle Street are unlikely to place much weight on this morning's figures. While well-documented issues continue to plague the unemployment data, the earnings series is now also subject to question marks, and potential revisions, given late pay data submissions. At the present rate, the ONS seem unlikely to have got their house ‘in order' until the tail end of next year at the earliest.

Taking that into account, it's tough to imagine today's data materially changing the policy outlook for the ‘Old Lady'. A 25bp cut at the next meeting in early-May remains nailed on, with further such cuts likely to be delivered on a quarterly basis over the remainder of the year, as headline CPI remains on a path towards 4% over the summer.

That said, risks to the outlook do now tilt in a distinctly more dovish direction, as downside growth risks continue to mount, chiefly as a result of President Trump's numerous tariff announcements. Were policymakers to become confident that the risks of inflation persistence had sufficiently abated, a more rapid pace of normalisation could be delivered. Tomorrow's March CPI data will, hence, be considerably more impactful in moving the needle for the BoE.