Trump exempts electronics from China tariffs

General market commentary

Equity markets ended a highly volatile week on a strong footing, with Friday capping off the largest weekly gains for the S&P 500 and Dow Jones since November 2023, and the Nasdaq notching its best performance since late 2022. Friday’s rally was driven by a combination of solid earnings from major U.S. banks—including JPMorgan Chase, Morgan Stanley, and Wells Fargo—and reassuring comments from Federal Reserve officials. Boston Fed President Susan Collins and New York Fed President John Williams both signalled the central bank’s readiness to support markets and maintain economic stability, helping restore investor confidence after a chaotic week of headline-driven swings.

Throughout the week, shares were whipsawed by the evolving trade conflict between the U.S. and China, with tit-for-tat tariff escalations dominating the narrative. The S&P 500 experienced its widest weekly trading range since March 2020, reflecting investor unease. However, a tariff reprieve on European goods and expectations of possible de-escalation helped ease pressure. All 11 major sectors in the S&P 500 ended Friday in positive territory, with materials and technology leading the gains. While the outlook remains uncertain and earnings guidance is under scrutiny, the market’s resilience suggests that some of the worst-case trade war scenarios may already be priced in, offering a glimmer of optimism for the weeks ahead.

Latest market and economic update

Asian equities surged on Monday, led by a 2.7% rally in Hong Kong's Hang Seng index, as tech shares gained on news of temporary U.S. tariff exemptions for electronics. Broader regional markets also advanced, with Japan’s Nikkei 225 rising 1.5%, South Korea’s KOSPI up 1%, and Australia's ASX 200 adding 1.3%, although concerns over the ongoing U.S.-China trade tensions persisted.

US equity futures rose overnight, buoyed by the temporary exclusion of electronics from President Trump's steep trade tariffs on China, although he warned of further tariffs on the sector. The positive sentiment followed strong first-quarter earnings from major banks and assurances from the Federal Reserve, while investors remain focused on upcoming earnings reports and more details on Trump's tariff plans.

European equities closed lower on Friday, with the STOXX 600 down for a third consecutive week, as heightened volatility from U.S. tariff shifts deepened trade war fears. Key movers included a 1% decline in Germany's trade-exposed index, a 3.8% drop in Stellantis shares following weak Q1 shipments, and a 2.4% fall in BNP Paribas after a report on ECB opposition to its capital treatment deal.

The US dollar weakened this morning, continuing its decline from a three-year low, as investor confidence was shaken by ongoing tariff-related uncertainties and a sharp sell-off in U.S. Treasuries. As a result, the euro rose 0.3% to $1.1396, nearing its three-year high, amid growing nervousness about the dollar's future as the global reserve currency.

Oil prices dropped slightly on Monday, remaining near four-year lows as concerns over weaker demand and the ongoing US-China trade war weighed on the market, with forecasts of economic strain on China, adding to the pressure. Brent crude fell 0.3% to $64.56 a barrel, while West Texas Intermediate dropped by the same margin to $60.75, as mixed signals from the US regarding tariffs on Chinese electronics further contributed to market uncertainty.

China's trade surplus surged to $102.64 billion in March, significantly exceeding expectations, driven by a 12.4% year-on-year rise in exports as exporters rushed to ship goods before steep U.S. tariffs took effect. However, imports fell by 4.3% year-on-year, reflecting weak domestic demand amid slowing economic growth and escalating trade tensions with the U.S.

S&P Global upgraded Italy's sovereign debt rating to BBB+ from BBB, citing improved public finances, resilient exports, and strong domestic savings, despite global market uncertainties. The upgrade is seen as a boost for Prime Minister Giorgia Meloni ahead of key discussions with U.S. President Trump, although Italy's economic growth remains sluggish with a revised forecast of just 0.6% for 2025.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Late on Friday, the Trump administration announced temporary exclusions from recently imposed tariffs on a range of electronics, offering much-needed relief to tech firms like Apple that heavily rely on Chinese imports. However, U.S. Commerce Secretary Howard Lutnick stated that smartphones, computers, and certain other electronics, including semiconductors, could still face separate tariffs in the coming weeks.

Wells Fargo's first-quarter profit exceeded expectations as the bank reduced costs and set aside less for potential loan losses, although it lowered its net interest income forecast due to weaker loan growth. Despite this, the bank's CEO warned that U.S. tariffs could slow economic growth, with shares falling 11% this year amid ongoing concerns about economic volatility.

JPMorgan Chase exceeded first-quarter profit expectations, driven by record equities trading and higher fees from debt underwriting and mergers, but CEO Jamie Dimon warned of a 50% chance of a global recession this year due to trade tensions and geopolitical volatility. Despite the cautious outlook, the bank's trading revenue surged 21%, and its provisions for credit losses increased as a precaution against potential economic strain from tariffs and inflation.

Morgan Stanley reported stronger-than-expected first-quarter earnings, with EPS of $2.60 and revenue of $17.7 billion, surpassing analyst forecasts. The bank's equities sales and trading business outperformed expectations, generating $4.13 billion in revenue, although wealth management fell slightly short with $7.3 billion in revenue.

BlackRock's assets rose to a record $11.58 trillion in the first quarter, despite market volatility and concerns over U.S. tariffs, while its net income fell slightly to $1.51 billion. CEO Larry Fink noted increased client anxiety about market uncertainty but reassured that the firm is well-positioned to navigate through global economic shifts, with long-term inflows remaining strong.

BNY Mellon exceeded first-quarter profit expectations, driven by growth in assets under custody and higher fee-based revenues. The bank reported a 3% rise in fee revenue and an 11% increase in net interest income, with assets under custody reaching $53.1 trillion, a 9% year-on-year growth.

Shares of Taiwan Semiconductor Manufacturing Co rose by 4% on Friday after a China Semiconductor Industry Association notice exempted its chips from tariffs, potentially benefiting key clients like AMD and Qualcomm. The company also reported strong financial results, with March 2025 net revenue up 46.5% year-on-year, highlighting robust growth amid ongoing trade tensions.

Novartis announced plans to invest $23 billion in building and expanding 10 facilities in the U.S. over the next five years, amid renewed threats of drug import tariffs from the Trump administration. The move, which is part of a broader $50 billion U.S. investment strategy, includes six new manufacturing sites and a research hub, expected to create over 5,000 jobs.

Ecopetrol could see its profits fall by up to the equivalent of $2.76 billion this year due to falling oil prices, prompting potential closures of up to 30 higher-cost fields, though these are not major producers. Separately, the company announced plans to boost natural gas sales from both local production and imports, with offshore supply expected to meet around 14% of Colombia’s current demand by year-end.

Citi has cut its earnings and sales forecasts for Nvidia and Marvell Technology due to lower cloud capex expectations and ongoing trade-related macro uncertainty, particularly concerns around Microsoft’s spending. Despite trimming price targets—Nvidia to $150 and Marvell to $96—both equities remain on Citi’s Buy list, with analysts citing strong market positions and long-term growth potential.

Bank of America upgraded American Express to "Buy," citing the company's strong customer base, resilient earnings, and ability to navigate economic downturns despite macroeconomic uncertainties. However, the bank lowered its 2025 revenue growth and EPS forecasts and reduced its price target to $274, while increasing credit reserves in anticipation of potential economic challenges.

Evercore ISI upgraded Verizon to "Outperform," citing improving subscriber trends, fibre growth potential, and strong valuation after years of underperformance. The firm raised its price target to $48, highlighting Verizon's strategic upside from its planned acquisition of Frontier's fibre assets and potential for significant synergies.

UBS upgraded Newmont Corporation to "Buy" and raised its price target to $60 per share, citing a more favourable gold price outlook and potential for sustained shareholder returns. The firm forecasts strong cash flow generation and capital returns through buybacks, while expecting operational improvements and a more conservative 2025 production forecast to drive positive momentum.

Upcoming data and events

Markets are gearing up for a busy day, with key events including the release of the OPEC Monthly Report and speeches from Federal Reserve officials, offering insights into oil market trends and monetary policy. Earnings season also continues, with major companies such as Goldman Sachs, M&T Bank, and Pinnacle Financial set to report their latest quarterly results.

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