Archives: Reuters Articles

NEW YORK – Wild swings in global markets are poised to keep US stock investors on edge in the coming week, as a weakening dollar and a selloff in Treasuries compound extreme equity volatility that erupted after President Donald Trump launched his sweeping tariffs.

The S&P 500 was set for solid gains on the week after Trump pulled back on the heftiest tariffs on many countries, relieving Wall Street’s worst-case scenario. Still, the benchmark index still was down about 13% from its February 19 all-time closing high. Concerns about lasting economic damage remained as the US and China ratcheted up their trade battle and questions lingered over levies elsewhere as Trump only paused many of the most severe tariffs.

Investors punished US assets in the wake of Trump’s tariffs, with the dollar plunging against other major currencies and benchmark US Treasury yields, which move opposite to bond prices, surging.

The stock market is “very unsettled” as investors weigh how to price in any economic fallout from the changing tariff backdrop, said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

The market is “kind of trapped by the level of uncertainty that lurks out there,” Luschini said. “And therefore investors are largely unwilling to make big bets in one direction or another.”

A volatile week in stocks was highlighted by Wednesday’s 9.5% jump for the S&P 500, the index’s biggest one-day rise since October 2008 during the heart of the financial crisis.

The Cboe Volatility index, an options-based measure of investor anxiety, stood at around 40, more than twice its historic median level.

Stock investors were warily watching moves across asset classes, in particular the dollar and Treasuries. An index that measures the dollar against a basket of currencies on Friday fell below 100 for the first time in nearly two years, while the yield on the benchmark 10-year Treasury was on pace for its biggest weekly jump in decades.

In many prior risk-off events, the dollar and Treasuries have acted as safe havens, but that has not been the case over the last week as stocks have tumbled, said Walter Todd, chief investment officer at Greenwood Capital in South Carolina.

“We are the reserve currency and the risk free asset of the world, and our markets are not acting as such,” Todd said.

The yield on the 10-year Treasury on Friday topped 4.5%, which investors have cited as a level that could cause turbulence for stocks. Higher yields translate into higher borrowing costs for consumers and businesses, while potentially making bonds more competitive investments against stocks.

“Until Treasuries stabilize and start to behave normally, risk assets will struggle,” Barclays analysts said in a note on Friday.

Quarterly US corporate results in the coming week provide another test for investors. Goldman Sachs, Johnson & Johnson, and Netflix are among the major US companies set to report.

Bryant VanCronkhite, senior portfolio manager at Allspring Global Investments, said he would be looking for companies which can show confidence in their businesses despite the shifting tariff landscape.

“I’m looking for companies that have the competence and the desire to invest through this cycle,” VanCronkhite said.

Data on US retail sales for March will shed light on the health of the consumer, but investors may discount the report to some extent because it covers a period before Trump’s April 2 tariff announcement. A survey on Friday showed US consumer sentiment fell sharply in April and 12-month inflation expectations surged to the highest level since 1981 amid unease over escalating trade tensions.

Markets will remain highly sensitive to developments on the trade front. Investors will hope for evidence of progress between the US and countries for which Trump has paused hefty levies for 90 days.

The faceoff between the US and China — the world’s two largest economies — will also consume attention. Beijing increased its tariffs on US imports to 125% on Friday after Trump’s move to hike duties on Chinese goods.

“China negotiations remain key for markets,” Citi strategists said in a note.

(Reporting by Lewis Krauskopf; Editing by David Gregorio)

 

NEW YORK – Wall Street stocks tumbled on Thursday on mounting worries over the economic impact of US President Donald Trump’s multi-front tariff war.

All three major US stock indexes suffered steep losses, forfeiting much of the previous session’s gains as growing concerns over the escalating Washington-Beijing trade face-off dampened optimism over upbeat economic data and US-Europe trade negotiations.

After Trump announced a 90-day tariff reprieve on Wednesday, the S&P 500 surged 9.5%, the largest one-day percentage jump since October 2008. The tech-heavy Nasdaq soared 12.2%, notching its second-biggest daily gain on record.

Following the whipsaw of Wednesday’s bounce and Thursday’s selloff, the S&P 500 remained well below levels before the reciprocal tariffs were announced last week.

“Investors are still uncomfortable with it, because they don’t know what the end game is,” said Paul Nolte, senior wealth advisor at Murphy & Sylvest in Elmhurst, Illinois. “I think what we’re seeing, still, is investor concern about tariffs and that is pretty much front and center for everything.”

The Labor Department’s Consumer Price Index report showed the prices consumers pay for a basket of goods unexpectedly edged lower in March, with core price growth cooling down 2.8% year-on-year, coming within one percentage point of the Federal Reserve’s 2% inflation target.

But the Fed’s path forward, in light of ongoing trade negotiations, is less clear.

Fed Governor Michelle Bowman said on Thursday that while the US economy remains strong, the effects of Trump’s trade policies are unclear, while Chicago Fed President Austan Goolsbee said rate cuts could resume once the uncertainties surrounding trade policy is resolved.

In response to Trump’s 90-day tariff pause, the European Union will delay retaliatory levies on American goods as countries within the bloc scramble to reach trade deals with Washington, said European Commission chief Ursula von der Leyen.

But the trade war with Beijing persists, with China vowing to “follow through to the end” if the US does not let up.

The CBOE Market Volatility Index, often called the “fear index,” remained elevated.

“It’s hard for investors to feel comfortable about buying stocks with volatility so high,” Nolte added.

According to preliminary data, the S&P 500 lost 189.79 points, or 3.45%, to end at 5,267.11 points, while the Nasdaq Composite lost 737.66 points, or 4.31%, to 16,387.31. The Dow Jones Industrial Average fell 1,029.51 points, or 2.54%, to 39,578.94.

Big Tech came under pressure once again, with each of the so-called Magnificent Seven group of artificial intelligence-related momentum ending with steep losses.

CarMax slid after the used-car retailer missed fourth-quarter profit expectations.

First-quarter earnings season kicks off on Friday with big banks, including JPMorgan Chase, Morgan Stanley and Wells Fargo due to report.

(Reporting by Stephen Culp; Additional reporting by Shashwat Chauhan and Purvi Agarwal in Bengaluru; Editing by Richard Chang)

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

HONG KONG – US President Donald Trump’s erratic policymaking may be out of Beijing’s hands, but there is one vital thing it can control: its stock market. Chinese indexes have been less volatile this past week compared to global benchmarks. Official intervention is one reason. The resilience of equities matters now more than usual to China as it seeks to shore up domestic confidence both to withstand US tariffs and to spur consumption.

Since Trump unveiled sweeping reciprocal tariffs on his “Liberation Day” on April 2, the S&P500 has fluctuated wildly – diving 12% in four days and then rallying 10% on Wednesday following Trump’s abrupt U-turn on most countries, except China which was hit with a 125% levy. By contrast, Shenzhen and Shanghai remain calm: the benchmark CSI300 has retreated by a relatively mild 4% this month.

Chinese equities were already deeply discounted but it helps a lot that the “national team”, or designated state-backed entities, are buying up stocks to prop up prices; others have pledged share buybacks. Regulators have also eased rules to allow insurers to up their equity allocations.

Most notably, Central Huijin, part of the country’s sovereign wealth fund, has stepped in as a de facto market stabilization fund. On Monday, it said it had increased holdings of exchange-traded funds and will continue to do so, without elaborating. That sends a powerful signal to local investors that more support is on the way: the state giant oversees more than USD 27 trillion of assets after a February revamp which elevated its role in helping Beijing support asset prices.

Moreover, investors are betting on aggressive fiscal policies to help the government get close to its GDP growth target of “around 5%” this year. That’s because boosting consumption can offset collapsing exports for the USD 18 trillion trade-dependent economy. And reflating property and stock prices is key to that goal.

Optics matter too. Chaos in the US bond market essentially forced Trump to blink on his trade war. Meanwhile, China vowed earlier this year to stabilize asset prices. Fulfilling that promise will shore up the faith ordinary Chinese have in Beijing’s broader policy response. That gives China’s national team a vital role in the ongoing standoff between the world’s two largest economies.

Context news

China’s top leaders are planning a high-level meeting soon to hammer out measures to boost the economy and stabilise capital markets as trade war with the United States escalates, Reuters reported on April 9, citing people with knowledge of the matter.

Central Huijin, the domestic unit of sovereign wealth fund China Investment Corp, said on April 2 it had increased its holdings of exchange-traded funds and would continue to do so in the future to “resolutely safeguard” the stable operation of the capital market.

(By Ka Sing Chan; Editing by Robyn Mak and Ujjaini Dutta)

 

NEW YORK – Stock indexes posted their biggest one-day gains in years, with the S&P 500 recording its largest rise since 2008, while the dollar gained and Treasuries pared losses on Wednesday after US President Donald Trump declared a temporary US pause on tariffs.

The announcement by Trump came in the afternoon after days of market turmoil, with bond prices and the US dollar selling off earlier in the day on fears that the administration’s plans to raise tariffs to levels last seen more than 100 years ago would push the economy into recession.

The president announced an immediate 90-day tariff pause for many countries even as he raised the levy on Chinese imports to 125%.

The news of a pause brought sudden relief to the market. The S&P 500 ended 9.5% higher, while the Nasdaq rose 12.2% in its biggest one-day gain since January 3, 2001, and its second-biggest on record. But investors said uncertainty about the longer-term plan for tariffs persisted.

“This is the pivotal moment we’ve been waiting for,” said Gina Bolvin, president of Bolvin Wealth Management Group in Boston. “The timing couldn’t be better, coinciding with the start of earnings season.”

“However, uncertainty looms over what happens after the 90-day period, leaving investors to grapple with potential volatility ahead,” Bolvin added.

The upcoming US quarterly reporting period will offer more insights into the health of corporate America, with several US banks, including JPMorgan Chase, due to report results on Friday.

Benchmark 10-year Treasury prices had also trimmed earlier losses after the US Treasury Department saw strong demand in an afternoon auction of the notes.

The yield on benchmark US 10-year notes rose 6.8 basis points to 4.328%. It earlier reached 4.515%, the highest since February 20. Bond yields move opposite to prices.

A sharp selloff in Treasury prices this week and reports of large liquidations of bonds had raised concerns about deteriorating market liquidity.

The dollar was lower before Trump’s announcement.

The selloff in US assets since Trump’s announcement of sweeping tariffs on April 2 has been broad and deep, with Deutsche Bank analysts in a note earlier on Wednesday saying that the “market has lost faith” in them and the world was entering uncharted territory in the global financial system.

The dollar index, which measures the greenback against a basket of currencies, including the yen and the euro, rose 0.25% to 103.03, with the euro down 0.08% at USD 1.0947.

Against the Japanese yen, the dollar strengthened 1.04%, while the dollar rose 1.01% versus the Swiss franc.

US stocks sharply extended gains on Trump’s announcement.

The Dow Jones Industrial Average rose 2,962.86 points, or 7.87%, to 40,608.45, the S&P 500 rose 474.13 points, or 9.52%, to 5,456.90 and the Nasdaq Composite rose 1,857.06 points, or 12.16%, to 17,124.97.

MSCI’s gauge of stocks across the globe rose 42.32 points, or 5.70%, to 785.28. Earlier in the day, the pan-European STOXX 600 index ended down 3.5%.

Oil prices also jumped on the tariff news.

Brent futures rose USD 2.66, or 4.23%, to settle at USD 65.48 a barrel. US West Texas Intermediate crude futures rose USD 2.77, or 4.65%, to USD 62.35.

(Reporting by Caroline Valetkevitch in New York, additional reporting by Amanda Cooper in London; Additional reporting by Stella Qiu in Sydney; Editing by Gareth Jones, Alex Richardson, Chizu Nomiyama, Emelia Sithole-Matarise, and Matthew Lewis)