Wall Street Set for Lower Open As Tariff Exemption Optimism Fades

Glendon

Stocks

Economic

China–U.S. Trade War

Summary:

Futures down: Dow 0.33%, S&P 500 0.28%, Nasdaq 0.2% Boeing falls after China halts deliveries Bank of America, Citigroup gain after higher Q1 profit

U.S. stock index futures pointed to a lower open on Tuesday, as optimism over the possibility of tariff relief for the auto sector waned on signs of new levies on pharma and semiconductor imports.

Federal Register filings showed the Trump administration was proceeding with probes into imports of pharmaceuticals and semiconductors as part of a bid to impose tariffs on both sectors.

Johnson & Johnson'sshares slipped 1.3% despite the company beating Wall Street estimates for first-quarter revenue and profit. Drugmakers such as Pfizerand Eli Lillyalso edged lower.

Trading was choppy, with index futures reversing early gains over hopes of more tarrif cuts after U.S. President Donald Trump on Monday hinted at potential exemptions for the 25% tariffs imposed on imports of autos and auto parts.

Rapid changes in U.S. policy have sparked steep market selloffs, and left investors, companies and consumers confused over the outlook for policy and economic growth.

"We had a pretty good day yesterday off not a lot of data, and we've moved pretty far since last Wednesday, it's totally natural at this point just to take a breath, maybe pull back a little bit," said Mark Hackett, chief market strategist at Nationwide.

The main indexes gained some ground on Monday after key electronics products were granted exemption from reciprocal tariffs.

Corporate results will be closely monitored over the next weeks for indications on how companies and consumers are coping with changes in trade policy.

"With all the uncertainty and all the moving parts that we have right now, it is not really in corporate management's best interest to do anything other than be cautious or provide no guidance at all, which is probably more likely," Hackett said.

Bank of Americaadvanced 1.4% after reporting a higher profit in the first quarter, while Citigrouprose 1.2% as it also reported higher profit, lifted by revenue from equities trading.

At 08:32 a.m., Dow E-miniswere down 134 points, or 0.33%, S&P 500 E-miniswere down 15.25 points, or 0.28% and Nasdaq 100 E-miniswere down 38.5 points, or 0.2%.

Among other stocks, Boeinglost 3.2% after a report said China has ordered airlines in the country to not take any further deliveries of the company's jets.

Most analysts expect markets to remain volatile, until there's more clarity on Trump's tariffs.

The S&P 500's 50-day moving average (DMA) slipped below the 200-DMA on Monday, producing a "death cross" pattern that suggests a short-term correction could turn into a longer-term downtrend.

Global investors have slashed their U.S. equity holdings over the past two months, and a record number of managers plan to keep cutting their exposure, BofA Global Research said.

The S&P 500is down 8.1% this year, while the tech-heavy Nasdaq Compositehas slumped nearly 13%.

Richmond Fed President Thomas Barkin and Fed Board Governor Lisa Cook are scheduled to speak later in the day.

Source: TradingView

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Warren Takunda

Economic

The number of workers on UK company payrolls has fallen at the fastest pace since the height of the Covid pandemic amid mounting global uncertainty and warnings that Rachel Reeves’s budget measures could lead to job losses.

Figures from the Office for National Statistics show the number of people employed in at least one job paid through pay as you earn fell by 78,000 in March after a revised fall of 8,000 in February.

Reflecting a slowdown in the jobs market, the latest snapshot showed annual pay growth rose slightly in the three months to February and remained at historically high levels. Regular pay, excluding bonuses, rose to 5.9%, from a revised 5.8% in the previous rolling three-month period to the end of January. This was slightly below a prediction of 6% from City economists.

Despite the drop in the number of workers on company payrolls, the ONS said its official unemployment rate remained unchanged at 4.4% in the three months to February.

However, the government agency has warned there are problems with the quality of the UK’s official jobs market statistics because of low response rates to its main labour force survey. Experts have argued this leaves policymakers “flying blind”, with the prospect that decisions are being taken based on flawed data. Number of Payrolled Workers in UK Fell by 78,000 Ahead of Budget Tax Rise_1

Number of Payrolled Workers in UK Fell by 78,000 Ahead of Budget Tax Rise_1

Business leaders had warned that tax rises announced by the chancellor in her October budget would force them to cut jobs and hold back on larger pay increases. Surveys at the start of this year suggested companies were cutting employment at the sharpest rate since the 2008 financial crisis, excluding the Covid pandemic.

Earlier this month, the government went ahead with a planned £25bn increase in employer national insurance contributions, affecting almost 1m businesses, as well as a 6.7% rise in the “national living wage”.

Businesses in typically lower-paying sectors, including hospitality, leisure and retail, have warned of the biggest potential hit.

The latest figures from HMRC payroll data, which provides an early estimate before the official labour force survey, show the biggest changes on the month were in health and social work, where employee numbers rose by 70,000. However, this was more than offset by other sectors, led by a fall of 92,000 in accommodation and food service activities.

Annual growth in payroll numbers slowed from 0.1% in February to -0.2% in March, the first negative reading since April 2021. Economists said the 78,000 decline was likely to be revised upwards next month, but that it provided some tentative signs that employers were responding to higher costs by cutting headcount.

“These figures indicate that labour market activity was sluggish in the run-up to this month’s substantial surge in tax and tariff costs, with unease over these twin threats limiting hiring plans,” said Suren Thiru, the economics director at the Institute of Chartered Accountants in England and Wales.

“The UK’s jobs market is entering a turbulent period with a troubling mix of escalating global uncertainty and rising cost pressures, notably the national insurance hike, likely to moderately push up unemployment, despite continued challenges over skills shortages.”

The number of vacancies in the UK fell by 26,000 in the three months to March to stand at 781,000, falling below pre-Covid pandemic levels for the first time since 2021.

The Bank of England is monitoring the jobs market closely for signs of pay resilience, which could feed through into persistently high inflation. With concerns over Donald Trump’s escalating trade war hitting the global economy and the UK, the central bank is expected to cut interest rates from the current level of 4.5% at its next policy meeting on 8 May.

“Big picture, the MPC [monetary policy committee] has the green light to cut Bank rate in May. Trade uncertainty remains rife. And slack in the labour market is emerging,” said Sanjay Raja, the chief UK economist at Deutsche Bank.

However, economists said while there were signs of the jobs market cooling, the picture remained resilient amid historically high levels of wage growth and relatively low levels of unemployment.

Britain’s economy has performed more strongly than expected, with growth in February of 0.5% outpacing analyst forecasts as businesses and consumers continued to spend despite the mounting global uncertainty.

“Employment continued to cool, but it hasn’t collapsed as the dire warnings from some business surveys suggested,” said Ashley Webb, a UK economist at the consultancy Capital Economics.

“But if the more uncertain backdrop from the recent US tariffs chaos soon becomes a bigger drag on firms’ hiring intentions, pay growth could start to fade more markedly.”

Source: Theguardian

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Warren Takunda

Economic

US President Donald Trump has hinted at potential relief from auto tariffs to give car manufacturers “a little bit of time” to switch production back to America. His comments followed the decision to temporarily exempt electronic products from duties, marking a further step back from the sweeping trade tariffs announced earlier this month.

“I’m looking for something to help some of the car companies, where they’re switching to parts that were made in Canada, Mexico and other places, and they need a little bit of time because they’re going to make them here,” he said at the Oval Office on Monday.

The Trump administration imposed 25% tariffs on automobile imports on 3 April. Bloomberg previously reported that major carmakers, including Ford Motor, General Motors, and Chrysler parent Stellantis NV, were lobbying for exemptions on certain low-cost car components, as these could face additional taxes on top of the full 25% auto tariffs if sourced from outside the US.

Meanwhile, the US Department of Commerce released a notice stating it had initiated investigations into the semiconductor and pharmaceutical trades. Both probes fall under Section 232 of the National Security Investigation framework, signalling the potential for further tariffs on the two sectors and adding to the uncertainty surrounding Trump’s tariff agenda.

These investigation notices came after Trump stated that exemptions on electronic products would be temporary and emphasised that “NOBODY is getting ‘off the hook’ for the unfair Trade Balances” on Sunday.

The semiconductor investigation document noted that it aims to “determine the effects on the national security of imports of semiconductors and semiconductor manufacturing equipment (SME), and their derivative products”. The pharmaceutical probe will examine imports of “finished drug products, medical countermeasures, critical inputs such as active pharmaceutical ingredients, and key starting materials, and derivative products of those items”.

European markets rise with automakers hoping for reprieves

European markets opened slightly higher after Trump’s comments suggesting possible relief on auto tariffs. As of around 9.30am CEST, stocks were broadly positive, with Germany’s DAX up 0.9%, the UK’s FTSE 100 gaining 0.7%, and the STOXX 600 up 0.6%. The CAC 40 was down 3%.

European automakers’ shares may benefit from the shift in US policy following a bruising sell-off over the past month. Notably, shares in Germany’s major car manufacturers—Volkswagen (VW), BMW, Porsche, and Mercedes-Benz—have each fallen between 15% and 18% during that period. On Tuesday morning, VW shares were up 3.7%, BMW showed a 3.8% jump, Porsche rose 2%, while shares in Mercedes-Benz leapt 3.8%.

However, Europe’s technology and pharmaceutical stocks could face renewed pressure due to the US probes into the semiconductor and drug sectors. In particular, Danish pharmaceutical giant Novo Nordisk may face heightened scrutiny, as the US is its largest single market for its weight-loss drug. The firm suffered its worst monthly decline in March after a series of disappointing trial results. Investor concerns have also been stoked by Trump’s tariff threat on pharmaceutical products, which could erode profit margins.

Among tech stocks, ASML—Europe’s largest chip equipment manufacturer—will be in the spotlight ahead of its earnings results on Wednesday. Shares in ASML rose 2.8% on Tuesday morning.

Euro holds firm on haven demand

In currencies, the euro held steady above 1.13 during Tuesday’s Asian session, hovering at its strongest level since 2022. The euro has been seen as a haven asset amid Trump’s tariff-driven trade shocks, which have triggered broader risk-off sentiment in global markets over the past month. The EUR/USD pair surged above 1.14 at one point on Monday and is likely to maintain its uptrend on continued economic uncertainty.

The European Central Bank (ECB) is expected to deliver its third consecutive interest rate cut on Thursday, reinforcing the Eurozone’s accommodative stance amid ongoing risks.

The euro rose very marginally against the dollar by less than 1% on Tuesday morning.

Source: Euronews

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Warren Takunda

Economic

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.