As we delve into the financial landscape for today, it appears to be a notably serene beginning to the week. With President Trump predominantly focused on his frustrations with Russia, the ongoing trade war seems to have taken a backseat for now. This relative quietness is a welcome change, especially since the White House’s communications on trade have often been more noise than clarity.
Trade Talks and Market Reactions
In recent updates, Agriculture Secretary Rollins revealed on television that discussions with China occur daily, a statement that might surprise Beijing. Meanwhile, Treasury Secretary Scott Bessent mentioned that he hasn’t engaged in tariff discussions with Chinese officials and is uncertain if President Trump has communicated with Xi Jinping, contrary to Trump’s earlier claims.
- The White House aims to hold trade negotiations with six different nations weekly leading up to Trump’s July 9 tariff deadline.
- Critics argue that this is overly ambitious since it typically takes around 18 months to finalize trade deal terms and even longer to see them enacted.
Currently, market sentiment suggests that the peak tariff phase may have been reached, with expectations that Trump will ultimately reduce tariffs on China. This comes after significant warnings from major U.S. retailers last week about potential shortages on store shelves if tariffs remain high.
Analysts’ Insights and Market Performance
Barclays analysts project that tariffs may settle at 60% for China, 10% for other nations, with sector-specific levies maintained at 25%, albeit with some exceptions. They caution that even this scenario would be less favorable than their most pessimistic predictions for 2025.
- Asian stocks show only slight gains today, while Wall Street futures have dipped by roughly 0.5%. This is surprising given the generally positive outlook for upcoming earnings reports.
This week, around 180 S&P 500 companies, accounting for over 40% of the index’s total market value, are set to announce their earnings. Noteworthy names include Apple, Microsoft, Amazon, and Meta Platforms. Investors will be particularly keen to hear about Apple’s projections for iPhone sales and how tariffs might affect its extensive supply chains.
Economic Indicators to Watch
Key economic data, including inflation reports from the Eurozone and the U.S., are anticipated to lean towards dovish stances, impacting policy decisions. The upcoming Q1 U.S. GDP report is also expected to reflect a downward bias due to a spike in imports, especially gold. Even when excluding gold, the Atlanta Fed’s GDPNow model predicts a 0.4% annualized decline.
The payroll figures set to be released on Friday will provide timely insights, refining expectations for a potential June rate cut from the Federal Reserve, which currently sits at approximately 63%.
Key Events Influencing Markets Today
- Luis de Guindos, Vice-President of the ECB, and Olli Rehn, Governor of the Bank of Finland, are scheduled to speak.
- The Dallas Fed will release its manufacturing survey.
As these developments unfold, market participants will be closely monitoring the implications for both domestic and global economies.
