Tariffs, Tech, and Tactical Rebounds: Global Markets on the Edge

🌍 Big Picture

The global financial markets navigated another intense week of geopolitical risk, policy surprises, and investor repositioning. The initial optimism following temporary U.S. tariff exemptions faded quickly as corporate earnings began to show cracks, and policy uncertainties remained unresolved.

President Trump’s aggressive tariff stance on China (duties up to 145%) continued to generate shockwaves across markets, while a feud between the White House and the Federal Reserve over interest rate direction added further volatility. Despite early-week optimism, the U.S. equity market reversed course midweek as Fed Chair Powell signalled that rising tariffs could lead to "higher inflation and slower growth," while reiterating the Fed’s wait-and-see stance. Trade tensions remained the dominant theme, impacting investor sentiment and realigning capital flows globally.

In Europe, markets staged a remarkable rebound as investors bet on the ECB’s dovish resolve and hopes of a U.S.-EU tariff resolution. The ECB delivered a 25 bps rate cut and opened the door to further easing. In Asia, markets were mixed—Japan’s Nikkei rebounded on improving trade dialogue, while Hong Kong and mainland Chinese equities remained cautious amid fragile economic data and ongoing trade pressure.

Monetary policymakers around the world showed a clear intent to cushion the fallout. Central banks in Singapore and South Korea pivoted dovishly, while traders expect the PBoC to cut rates imminently. Overall, global markets reflected a delicate balance of macroeconomic headwinds and policy cushioning, with high volatility likely to persist.

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📊 Assets at a Glance

Equities:

U.S.: A volatile short week ended in losses. The S&P 500 fell ~1.5%, Nasdaq -2.6%, and Dow -2.7%, driven by healthcare weakness (UnitedHealth -22%), tech export curbs (Nvidia -6.9%), and tariff anxieties.

Europe: STOXX 600 rebounded ~4% after steep prior-week losses. Germany’s DAX and France’s CAC 40 gained strongly, supported by easing ECB and trade optimism.

Asia: Nikkei 225 jumped 3.4%—best week in three months. Hong Kong’s Hang Seng rose over 3% on a tech rebound, while the Shanghai Composite remained flat. Sentiment improved late in the week on signs of diplomatic progress with the U.S.

Bonds:

U.S.: Yields spiked despite equity weakness. 10Y Treasury rose above 4.3% as risk premium rose and safe-haven flows ebbed. Concerns about the U.S. fiscal path and policy coherence also weighed.

Europe: ECB's rate cut drove eurozone yields lower. Italy’s 2Y yield hit three-year lows, boosting bond-sensitive stocks.

Asia: Mixed signals. JGB yields firmed slightly; China’s and Korea’s yields declined on expected monetary easing.

Currencies:

USD: Dropped to multi-month lows vs. yen, euro, and Swiss franc amid fading haven demand and dovish Fed expectations.

JPY: Strengthened on safe-haven flows and expectations BoJ will tighten further. USD/JPY tested multi-month lows.

EUR: Held strong above 1.13 as ECB easing was offset by relative political calm and improving risk appetite.

GBP: Traded firm on resilient UK macro data and cross-asset stability.

CNY: Softened slightly, with investors expecting imminent PBoC easing.

Commodities:

Gold: Hit record highs above $3,300/oz amid dollar softness and geopolitical fears. Slight profit-taking is seen into the weekend.

Oil: Brent crude hovered near $68/bbl, rangebound due to competing forces of growth concern and geopolitical premium.

Industrial Metals: Copper rebounded late in the week on Chinese infrastructure hopes.

Agriculture: Mixed, with soybeans pressured by U.S.–China trade disruptions and corn/wheat reacting to weather and export data.

Crypto:

Bitcoin: Whipsawed between $77K–$ 85 K. Ended ~flat as the XRP ETF launch balanced broader volatility.

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📅 Key Events Next Week

Tuesday, April 22

Eurozone Consumer Confidence (April): Early insight into household sentiment under tariff pressure.

U.S. Existing Home Sales (March): Key housing sector gauge.

PBoC Loan Prime Rate Decision: The market expects a 10–15 bps cut to support growth.

Wednesday, April 23

U.K. Public Sector Net Borrowing (March): Fiscal health check.

U.S. New Home Sales (March): Another housing indicator amid elevated mortgage rates.

Canada CPI (March): Influential for BoC policy outlook.

Thursday, April 24

U.S. Q1 GDP (Advance): The Most closely watched macro report of the week. Consensus: ~1.2% annualised.

U.S. Durable Goods Orders (March): Key business investment signal.

Germany Ifo Business Climate (April): Sentiment gauge from the EU's largest economy.

Friday, April 25

Bank of Japan Monetary Policy Decision: Investors expect policy to hold with a hawkish lean.

U.S. University of Michigan Consumer Sentiment (Final April): Updated take on confidence and inflation expectations.

Earnings Highlights:

Mega-cap tech and industrials to report: Microsoft, Meta, Alphabet, Tesla, Caterpillar, and ExxonMobil. The market will watch for earnings guidance and commentary on cost pressures and trade.

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💡 Investment Idea

Asset: Long Schneider Electric (EPA: SU)

Rationale: Schneider Electric is well-positioned to benefit from global megatrends in electrification, digitalisation, and sustainable infrastructure. Its strong business segments in energy management and industrial automation give it robust earnings potential even in a volatile macro backdrop. The company is also benefiting from the rebound in European indices, especially the industrial sector, which lifted its share price following upbeat guidance and index-wide gains.

Fundamental Drivers:

Revenue Growth: 2025 revenue rose 12.5% YoY to €42.92 billion.

Profitability: EBIT increased 19.36% to €7.84 billion, with margin improvement.

Dividend Strength: €3.90/share proposed for FY2024; 15-year progressive dividend history.

Technical Outlook:

Price action on the weekly timeframe has touched the 200-week EMA, a critical dynamic support level.

RSI bounced from oversold, now stabilising near neutral.

The MACD line is still below the signal line but shows strong potential for a bullish crossover, often an early indicator of trend reversal.

Strategy:

Accumulate near current levels, especially on dips near the EMA(200).

Upside targets: £250 and £272 in the medium term.

Stop-loss below £166 for risk management.

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Risk Disclaimer

The information provided in this newsletter is for educational and informational purposes only and should not be considered financial advice. Financial markets involve substantial risk, and investments can fluctuate in value, leading to potential losses. Past performance is not indicative of future results. Before making any investment decisions, readers should consider their own risk tolerance and financial situation and consult with a licensed financial advisor if necessary. The strategies and opinions expressed are based on current market conditions and may change without notice.