(The opinions expressed here are those of the author, a columnist for Reuters.)
By Mike Dolan
LONDON (Reuters) – What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Financial Industry and Financial Markets
For investors praying for some respite from weeks of extreme volatility as the Easter break approaches, weekend events weren’t all that encouraging.
Even though a late stock market rally on Wall Street on Friday has been extended in futures prices into a new holiday-shortened week, flip-flopping of U.S. trade policy announcements over the past two days doesn’t bode well for corporate and household planning – or indeed market stability.
Another big focus of the week will be central bank meetings in Canada and in the euro zone, with both the European Central Bank and the Bank of Canada expected to lower interest rates by a quarter point each.
Today, we look at the ECB’s decision in detail and how it will view the sharp appreciation of the euro in its deliberations. Many fear it may start to become wary of deflationary forces building.
Today’s Market Minute
* U.S. President Donald Trump on Sunday said he would beannouncing the tariff rate on imported semiconductors over thenext week, adding that there would be flexibility with somecompaniesin the sector. * China’s exports rose sharply in March after factoriesrushed out shipments before the latest U.S. tariffs took effect,but an escalating Sino-U.S. trade war has darkened the outlookfor factories and growth in the world’s second-biggest economy. * Japan is gearing up for trade negotiations with the UnitedStates that will likely touch on the thorny topic of currencypolicy, with some officials privately bracing for Washington tocall on Tokyo to prop up the yen. * Iran and the U.S. said they held “constructive” talks onSaturday and agreed to reconvene next week in a dialogue meantto address Tehran’s escalating nuclear programme, with Trumpthreatening military action if there is no deal. * Credit ratings agency S&P Global upgraded Italy on Fridayin a surprise move just days after Rome halved its economicgrowth forecast amid global market turmoil and said its hugepublic debt would rise this year and next.
Easter rising? Markets seek solace
In Washington’s second significant retreat from its sweeping April 2 trade tariff plans, President Donald Trump granted exclusions from steep tariffs on smartphones, computers and some other electronics imported largely from China – sizeable relief to tech firms like Apple reliant on imported products.
That in itself may have bamboozled anyone trying to frontload electronic purchases to beat the tariffs, but before the weekend was out, the picture changed yet again.
Trump on Sunday announced a national security trade probe into the semiconductor sector and then said he would announce the tariff rate on imported semiconductors over the next week, with “certain flexibility” for some companies in the sector.
It’s probably wise to prepare for at least three more months of this.
Households were certainly pessimistic. The University of Michigan Surveys of Consumers on Friday said its monthly consumer sentiment reading dropped much further than forecast to its lowest in almost three years.
But perhaps most alarming was its reading of consumer price views, which showed 12-month inflation expectations soaring to 6.7% – the highest reading since 1981. After a week in which the U.S. long-bond yield surged by its most since 1987, there’s a pattern developing perhaps.
The New York Federal Reserve publishes its equivalent survey later on Monday – though markets will be bracing more for the release of hard U.S. retail sales numbers later this week. A question in these will be whether consumers have stepped up goods purchases in advance of expected tariff increases.
While Wall Street stock futures showed some stability, the plummeting dollar – which hit three-year lows against the euro on Friday – continued to ebb on Monday. But U.S. 10-year and 30-year Treasury yields did calm down a little – the former hovering just under 4.45%.
Chart of the Day:
In a world of such dramatic fundamental policy and economic disruptions, financial chart patterns and trends may seem a little beside the point. But some of these remain important for investment funds and strategists who rely on market momentum signals.
One of the most basic is how the stock market is trading relative to its long-term 200-day moving average. The S&P500 fell below this on March 11 and has lost more than 500 points since then as the tariff war ensued.
Another closely watched momentum signal is when the shorter-term 50-day average moves above or below the 200-day line. And it’s now about to slice below it for the first time in more than a year, a move ominously dubbed a “Death Cross”.
The last time this happened in 2022, the S&P500 lost almost 1,000 points over the subsequent six months.
Today’s events to watch
* New York Federal Reserve’s March consumer sentiment survey and inflation expectations
* Federal Reserve Board Governor Christopher Waller, Richmond Fed President Thomas Barkin, Philadelphia Fed chief Patrick Harker and Atlanta Fed boss Raphael Bostic all speak
* U.S. corporate earnings: Goldman Sachs, M&T Bank
* U.S. Treasury Secretary Scott Bessent visits Argentina to meet Argentine President Javier Milei.
* China’s President Xi Jinping will pay a state visit to Vietnam
(Editing by Bernadette Baum)
