Market Highlights: Tariff Adjustments, Central Bank Signals & Inflation Trends
24/3/2025 – Trump Tariffs Narrow, Treasury Yields Climb as Markets Adjust
U.S. Treasury yields rose after scaled-back Trump tariffs, reflecting shifting investor sentiment. China’s proposed service subsidies could boost its economy and alter global demand. Australia’s household relief efforts may strengthen domestic spending and the Australian dollar.
Trump’s $3 billion cut in foreign aid signals a focus on domestic fiscal priorities, possibly reshaping U.S. global economic influence and trade strategies.
Higher U.S. Treasury yields could strengthen the U.S. dollar. China’s subsidies may boost gold demand, while Australia’s relief measures could lift the Australian dollar.
Australia and China’s economic measures reflect broader trends of government intervention to support growth and stability.
25/3/2025 – Russia-US Talks Expand Beyond Ukraine, Hinting at Geopolitical Shifts
South Korea’s Composite Business Sentiment Index rose to 86.7 in March from 85.3 in February, indicating a more optimistic business outlook. This reflects efforts by Asian central banks to balance growth with inflation control.
Russian Foreign Minister Lavrov has suggested talks with the U.S. may extend beyond Ukraine, signaling potential diplomatic shifts that could impact geopolitical stability and European energy markets.
Qualcomm has escalated its legal battle with Arm Holdings by involving global antitrust regulators, further complicating the tech sector’s geopolitical challenges amid U.S.-China tensions and global regulatory scrutiny.
26/3/2025 – U.S. Tariffs Spark Dollar Surge and Global Market Jitters
International markets reacted to U.S. tariff news, with the U.S. Dollar Index rising 0.35% to 104.55 and the Euro slipped 0.08% to $1.0744. Emerging markets remain cautious as S&P predicts reduced investment amid U.S. protectionist policies.
President Trump’s auto tariffs, starting April 2, could generate $100 billion annually. These tariffs, part of a broader import strategy, are causing market concerns, especially in Europe, where economic tensions are rising.
Geopolitical tensions are growing as U.S.-Europe trade disputes intensify. Canada is preparing a trade counter-strategy in response.
Gold and oil prices remain steady despite turbulence, while the dollar’s rally weighs on commodities. U.S. actions targeting Iranian oil funds could disrupt crude markets.
27/3/2025 – North America Faces Rising Transportation Costs Amid Tariff Uncertainty
Global markets are watching inflation and consumer sentiment. New Zealand’s confidence index fell to 93.2 in March, while rising transportation costs in North America fuel inflation. Argentina’s strong economic growth boosts optimism for emerging markets.
Australia’s May 3 election may affect business confidence, and the U.S. is pushing for alternatives to Chinese infrastructure. New Zealand’s weak sentiment and inflation could impact currencies, while Argentina’s growth might attract capital.
Fed official Collins stresses the need to monitor sentiment amid uncertainty. The EU’s proposed tech crackdown could impact global digital trade.
28/3/2025 – Geopolitical Uncertainty Rises with U.S. Legal & Policy Shifts
Global markets faced pressure from inflation concerns and trade tensions, leading to stock declines. Automakers warned of higher costs due to tariffs, while emerging markets struggled with weak European growth, impacting currencies and bond yields.
Geopolitical tensions remained tense with legal challenges to Trump-era policies and administrative reforms at USAID, adding uncertainty to the U.S. landscape.
saw Brazil’s Cooxupé raise its 2025 coffee forecast, while emerging market currencies weakened amid global economic uncertainties.
IMF disbursed $400M to Ukraine, reinforcing global financial support amid ongoing challenges.
What to be on the lookout for next week?
1/4/2025 – Tankan Large Manufacturing Index (JP)
The Tankan Large Manufacturing Index, released by the Bank of Japan, measures business conditions in Japan’s manufacturing sector. A result above 0 is bullish for the JPY, while below 0 is bearish.
This index is key for gauging the sector’s health, influencing inflation and growth expectations. A decline suggests economic sluggishness, possibly prompting monetary stimulus from the Bank of Japan.
Markets expect a slowdown in manufacturing sentiment, signaling cautious investor outlook. A sharper decline may heighten fears of contraction, while an unexpected rise could strengthen the yen and impact equity and gold markets.
1/4/2025 – Core Harmonized Index of Consumer Prices (MoM) & (YoY) (EU)
The Core Harmonized Index of Consumer Prices (HICP) tracks price changes in the European Monetary Union, excluding volatile items like food and energy. Released monthly by Eurostat, a high reading signals inflation, bullish for the Euro, while a low reading is bearish.
This index is crucial for gauging inflation, influencing European Central Bank (ECB) interest rate decisions. Any deviation from the previous value could impact consumer behavior and monetary policy, affecting both the euro and markets.
Risks include unexpected inflation spikes or deflation, which could challenge ECB actions and cause market volatility.
1/4/2025 Harmonized Index of Consumer Prices (MoM) & (YoY) (EU)
The Harmonized Index of Consumer Prices (HICP) tracks price changes in the European Monetary Union, released monthly by Eurostat. A high reading is bullish for the Euro, while a low reading is bearish.
The HICP is crucial for gauging inflation, directly influencing European Central Bank (ECB) monetary policy. A deviation from the previous MoM figure of 0.4% or YoY figure of 2.3% could significantly affect market dynamics.
Markets expect stable inflation, but unexpected changes may cause volatility, influencing ECB decisions and impacting currency, equity, and gold markets.
1/4/2025 ISM Manufacturing PMI (US)
The ISM Manufacturing PMI is a key indicator of U.S. manufacturing activity, released monthly. A reading above 50 signals expansion, which is bullish for the USD, while below 50 indicates contraction and is bearish.
This PMI gauges manufacturing health, influencing GDP growth and inflation expectations. Markets expect a stable reading around 50.3, indicating stagnation.
Risks include unexpected supply chain issues or demand changes, potentially causing market volatility and influencing Fed decisions on monetary policy if the figure deviates significantly from expectations.
2/4/2025 ADP Employment Change (US)
The ADP Employment Change report tracks private sector job growth in the U.S. A high reading is bullish for the USD, while a low reading is bearish.
This report is seen as a precursor to the Nonfarm Payrolls, influencing expectations around Fed interest rates. A reading close to the previous 77 suggests economic stability.
Unexpected results could impact market sentiment—lower numbers may weaken the USD and prompt Fed intervention, while higher figures could reinforce rate hike expectations.
3/4/2025 ISM Services PMI (US)
The ISM Services PMI gauges business activity in the U.S. services sector. A reading above 50 signals expansion, which is bullish for the USD, while below 50 indicates contraction.
This PMI is crucial for assessing U.S. economic health, especially with the service sector’s large contribution to GDP. A forecast drop from 53.5 to 53 could signal slowing growth, influencing Fed rate decisions.
Risks include a lower-than-expected reading, raising concerns of an economic slowdown and potential market volatility. Conversely, a strong result could reduce expectations for rate cuts.
Q&A Section:
Q1: What impact could the narrowing of Trump tariffs on March 24, 2025, have on global markets?
A1:The narrowing of Trump tariffs could lead to rising U.S. Treasury yields, boosting the U.S. dollar. China’s service subsidies may increase demand for gold, while Australia’s domestic relief measures might strengthen the Australian dollar. These events reflect broader global economic trends and government efforts to support growth and stability.
Q2: Why are markets anticipating the ISM Manufacturing PMI for April 1, 2025, and what are the risks?
A2: Markets expect a stable ISM Manufacturing PMI reading around 50.3, indicating stagnation. However, supply chain disruptions or changes in demand could cause significant deviations. A reading above 50 signals expansion and strengthens the USD, while a reading below 50 signals contraction, which could influence Fed monetary policy decisions.
