Market Turmoil Amidst Trump’s Tariff Threats

Global markets experienced a rollercoaster ride following renewed tariff threats from former President Donald Trump. The uncertainty surrounding trade policies has sparked volatility across various sectors, impacting everything from tech giants to European automakers.

EU Responds to Tariff Threats

In response to the looming threat of tariffs, the European Union, consisting of 27 nations, took a proactive stance. The EU suspended his own plans to impose retaliation tariffs on some American products and proposed zero tariffs for all industrial products on both parties.

Apple Faces a Direct Hit

Adding fuel to the fire, Mr. Trump targeted Apple directly via his social media platform, Truth Social.He declared that the iPhone sold in the US must be manufactured in the country and, if not, “Apple must pay a tariff of at least 25 %.”

This proclamation intensified the commercial war, directly impacting Apple, a major player in the U.S. stock market. While Apple has initiated a transition of some production to India, a significant portion still occurs in China.

Analysts estimate that shifting manufacturing to the United States could increase the iPhone’s price by as much as 250%. Following this news, Apple’s shares experienced a sharp decline, dropping by 3%.

Federal Reserve’s Stance on Interest Rate Cuts

Amidst concerns about the nation’s fiscal health and the uncertainty surrounding trade policies, Federal Reserve Governor Christopher Waller offered a glimmer of hope.He stated that the Fed still provides for a path to interest rate cuts at the end of this year.

Mr. Waller elaborated, If we manage to reduce tariffs about 10% and everything is ready for july, we will be in good shape for the second half of the year and, later, we will be in good position to advance with the feat cuts during that period.

Market sentiment was further buoyed by a Supreme Court ruling affirming the Federal Reserve’s independence, dismissing concerns that Mr. Trump might remove Chairman Jerome powell, who had faced pressure from the former president to lower interest rates.

Wall Street’s Key Movers

• Tesla: Shares fell by 2% following reports that it’s Chinese competitor, BYD, surpassed it in European sales.Jato Dynamics reported that BYD registered 7,231 vehicles in Europe, exceeding Tesla’s 7,165 units, despite EU tariffs on Chinese electric vehicles.
• Ross Stores: The company’s stock plummeted 10% after releasing weaker-than-expected forecasts for the second quarter, citing concerns over tariffs and macroeconomic uncertainty.
• Deckers Outdoor Corporation: The UGG boots manufacturer saw its shares collapse by 19.8% after announcing it would not provide annual objectives due to tariff-related macroeconomic uncertainty. Net sales for the first quarter are also expected to fall below analysts’ estimates.
• Intuit: In contrast, Intuit’s shares surged by 8.2% after the software group raised its full-year forecasts and provided an optimistic outlook for the current quarter, driven by strong demand for its TurboTax and QuickBooks software during tax season.

Top performing stocks included Mercel (+26.7%), Urannium (+24%), National Power (+21.2%),and Regenercell (+20.7%). The worst performing stocks were Deckers (-19.8%), Minis (-17.9%), Pony (-17%), Booz Allen (-16.4%), and Work Day (-11.8%).

European Markets Close Lower

European stocks closed with significant declines. The Stoxx 600 Paneuropeo Index fell by 0.9%,marking its first weekly decline in six weeks and its largest daily drop as April 9. The Eurozone shares indicator experienced a more pronounced decrease of 1.5%, while London’s FTSE 100 saw more moderate declines due to a recent trade agreement with the U.S. The Euro Stoxx volatility Index surged to its highest level in over three weeks.

The Stoxx 600 had previously recovered from its early April dip, fueled by trade agreements between the U.S. and various partners. However, the automobile and spare parts sector, that is expected to be the most beaten by tariffs, led the declines with a 3.1% decrease. Banks,sensitive to economic cycles,retreated by 1.8%, and the luxury goods index dropped by 2.7% due to its significant exposure to the U.S. market.

Germany’s DAX index fell by 1.5% after nearing an all-time high earlier in the day, following the release of data showing stronger-than-expected economic growth in the first quarter. The indexes of France, Spain, and Italy each fell by more than 1%.

European government bonds at 10 years experienced a decline, mirroring the performance of their U.S. counterparts, amid growing concerns about an economic slowdown. Investors began to anticipate more interest rate cuts from the European Central Bank, with expectations that the deposit rate would reach 1.60% in December, down from 1.72% prior to Mr. Trump’s comments.

In positive news, British Investment Platform AJ Bell rose by 8.4% after reporting a 12% year-on-year increase in pre-tax earnings for the first semester, boosted by increased customer activity.