Morning wrap (03.04.2025)

Donald Trump signed an executive order on retaliatory tariffs. All imports to the U.S. will be subject to a 10% tariff (except for goods from Canada and Mexico specified in the USMCA agreement). The European Union has been hit with a 20% tariff, Japan 24%, the United Kingdom 10%, and China an additional 34% (totaling 54%). The 10% base tariff will take effect on April 5, retaliatory tariffs on April 9, and auto tariffs are in effect from today.

Wall Street closed yesterday’s session in the green (S&P 500: +0.87%, DJIA: +0.56%, Nasdaq: +0.87%, Russell 2000: +1.65%), but Trump’s speech on “Liberation Day” triggered a sell-off in after-hours trading. U.S. index futures are recording deep losses (S&P 500: -2.7%, DJIA: -2%, Nasdaq: -3.2%, Russell 2000: -4%).

The sell-off is most visible in Magnificent 7 stocks (Tesla: -8%, Apple: -7%, Amazon: -6%, Nvidia: -5.7%, Meta: -4.7%, Alphabet: -3.5%, Microsoft: -2.9%).

Ursula von der Leyen criticized the U.S. president’s decision in her latest statement but expressed a willingness for “negotiation instead of confrontation.” The European Commission is finalizing retaliation for steel and aluminum tariffs, and further measures will be implemented if bilateral talks fail.

Adrianna Kugler from the Fed Board of Governors supports keeping interest rates unchanged in the face of persistent inflation risks and stable employment. According to UBS, tariffs could push U.S. inflation up to 5%.

Stock market in the Asia-Pacific region is deep in the red. Losses are led by Japan's Nikkei 225 (-3.3%), with declines also seen in HSCEI (-1.7%), Shanghai SE Composite (-0.5%), Kospi Index (-1.15%), and S&P/ASX 200 (-0.95%).

China’s services PMI rose above expectations in March to 51.9 (forecast 51.5, previous 51.4). The sector recorded the largest increase in new businesses since December, along with a sharp drop in output charges and employment.

Australia’s services PMI increased in March from 51.3 to 51.6, with sector growth driven mainly by declining price pressures and rising employment (the biggest increase since April 2023).

On the forex market: After record volatility during Trump’s speech, the dollar is weakening against almost all G10 currencies (USDIDX: -0.75%). Capital is primarily flowing into safe havens, such as the yen and Swiss franc (USDJPY: -1.4%, CHFUSD: +1.1%). EURUSD surpasses 1.09 mark (+0,85%).

On the commodities market, broad losses are observed. Gold is down 0.19% to $3,129 per ounce, silver down 2.13% to $33.15 per ounce, Brent and WTI crude oil futures are 2.5% lower, and NATGAS is down 1.7%.

The sell-off has not spared cryptocurrencies. Bitcoin is down 2.6% to $83,440, Ethereum down 2.6% to $1,831.50. Futures for Trump’s token are down 7.5%, Solana down 4.5%, and Chainlink down 2.9%.