Trump announces harsher-than-expected tariffs

General market commentary

After the markets closed on Wednesday, the mood turned cautious as President Trump's announcement of new reciprocal tariffs sent shockwaves through global markets. The U.S. will impose significant tariffs starting on April 9, with a 10% baseline effective April 5. The tariffs target countries such as China, the European Union, Japan, and others, with rates as high as 34% on Chinese goods and 24% on EU imports. This has caused a marked shift in investor sentiment, reflected in after-hours trading. Shares in the U.S. slumped, with S&P 500 futures pointing to a lower open, as traders adjusted to the implications of these sweeping tariff measures. Bond yields also dropped, with the 10-year Treasury yield falling 5 basis points to 4.13%.

This move by the U.S. government is likely to stoke further uncertainty in the global economy, particularly as it targets critical industries like automobiles, which will face a 25% tariff starting as off today. In commodities, WTI crude oil rose, while the U.S. dollar weakened against its global counterparts. Despite the tariff shock, economic data provided some positives. The ADP employment report showed stronger-than-expected private sector job growth, with 155,000 new jobs created in March. This, along with the uptick in manufacturing activity, signals that the underlying U.S. economy remains resilient, albeit facing headwinds from the evolving trade tensions. Overall, after-hours market movements reflect growing caution amid concerns over the long-term effects of escalating trade barriers.

Latest market and economic update

Asian markets were hit hard this morning, with Japan's Nikkei 225 plunging to an eight-month low, falling 4.7% amid concerns over U.S. tariff hikes. Other regional indices, including Hong Kong's Hang Seng and South Korea's KOSPI, also declined sharply as investors reacted to the new trade policies and their potential impact on export-driven economies.

U.S. equity futures were sharply lower overnight following President Trump's announcement of new tariffs, with S&P 500 Futures down 3.6% and Nasdaq 100 Futures falling 4.5%. The negative sentiment was driven by concerns over inflation, potential trade retaliation, and the broader impact of the tariffs on global markets.

European markets closed lower on Wednesday, with the Stoxx 50 falling 0.4% and the Stoxx 600 down 0.6%, as investors reacted to growing concerns over new U.S. trade tariffs. The healthcare sector was hit hardest, with Bayer leading losses, while positive news came from UniCredit and Crédit Agricole, which received regulatory approvals for acquisitions.

The US dollar weakened sharply against most currencies, including the euro, as heightened recession fears and the impact of President Trump's tariffs took a toll on investor sentiment. The EUR/USD pair, trading at 1.0912, reflecting the broader risk-off sentiment in the market.

Oil prices fell sharply on Thursday, with Brent crude down 2.13% to $73.35 per barrel and WTI dropping 2.26% to $70.09, as market concerns over the potential global trade war sparked by President Trump's new tariffs weighed on sentiment. The bearish outlook was further reinforced by a surprise rise in U.S. crude inventories and weaker-than-expected gasoline demand, heightening fears of a slowdown in global economic growth and fuel demand.

Equities on the move

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

Oracle has confirmed a cybersecurity breach where an attacker stole old client login credentials from its cloud servers, with the FBI and CrowdStrike investigating the incident. Although the stolen data includes credentials from as recently as 2024, Oracle reassured customers that the breach involves a legacy system no longer in use, posing minimal risk.

The Belgian government is reportedly considering selling its 5.6% stake in BNP Paribas, which it acquired through the purchase of Fortis Bank Belgium in 2009, in order to fund a planned increase in defence spending. The sale, which involves 63.3 million shares valued at around €4.84 billion, is part of Belgium's efforts to meet NATO's target of spending 2% of its GDP on defence this year.

Italy’s financial regulator, Consob, has approved UniCredit’s public exchange offer for Banco BPM shares, enabling the formal launch of the deal, which could significantly impact Italy’s banking sector. The offer, set to run from April 28 to June 23, 2025, will see Banco BPM shareholders receive 0.175 newly issued UniCredit shares for each Banco BPM share tendered.

Siemens has agreed to acquire US-based scientific software company Dotmatics for $5.1 billion from Insight Partners. The deal, which will enhance Siemens' AI-powered product lifecycle management software in the life sciences sector, is expected to close in the first half of fiscal 2026, subject to regulatory approvals.

BHP Group Ltd explored spinning off its Australian iron ore and coal divisions to focus on future-facing commodities like copper and potash but ultimately decided against it, citing the need for cash flow to fund major investments. While the plan was shelved, the company's leadership transition under new Chair Ross McEwan could see such strategic considerations revisited in the future.

DoorDash announced a partnership with Domino’s Pizza, where Domino’s drivers will deliver orders from DoorDash’s Marketplace, set to launch nationwide in the U.S. in May 2025 and expand to Canada later that year. The collaboration aims to boost sales and customer reach, particularly in suburban and rural areas, by combining DoorDash’s local commerce platform with Domino’s delivery network, while also offering benefits for DashPass subscribers.

ConocoPhillips is exploring the sale of its oil and gas assets in Oklahoma, acquired from Marathon Oil in 2021, with an estimated value exceeding $1 billion. The potential sale would contribute to the company’s goal of generating $2 billion through divestitures of non-core assets.

Tesla's first-quarter sales fell 13%, the lowest in nearly three years, due to rising competition, backlash against Elon Musk's political involvement, and delays to the Model Y refresh, though shares rebounded after speculation he might step back from his political roles. In fact, Wedbush analysts view Musk's potential departure from the Department of Government Efficiency as a "bullish sign" for Tesla, believing his renewed focus on the company could drive innovation.

Mizuho downgraded ASML to Neutral from Buy, citing downside risks to its 2026 outlook, with forecasts of a 3% sales decline and flat earnings per share. The firm also reduced its price target to €650 from €810, highlighting concerns over increased customer concentration with TSMC and expected declines in EUV shipments.

Goldman Sachs upgraded Fiserv to "Buy," citing strong growth drivers such as international expansion, new offerings in its Clover platform, and the rollout of its small business banking suite, CashFlow Central. The firm set a $260 price target, reflecting an 18% upside, with expectations of mid-teens EPS growth and a 5% free cash flow yield.

Raymond James downgraded United Airlines from Outperform to Market Perform, citing concerns over potential weakness in long-haul international travel demand and a shift in corporate and leisure travel trends. The firm removed its target price for the airline, noting broader industry risks and forecasting a cautious outlook for U.S. airlines, with a preference for Delta instead.

Susquehanna initiated coverage of GE Vernova with a "Positive" rating and a $370 price target, citing strong demand for its gas turbines and electrification technologies, supported by a $120 billion backlog. The firm expects the company to achieve significant revenue and EBITDA growth, driven by rising electricity demand, data centre expansion, and grid modernisation.

Citi upgraded Charles Schwab to "Buy," citing strong net new asset growth, improved trading activity, and progress in reducing short-term funding needs, raising its price target to $102. The firm expects further acceleration in asset growth and positive earnings momentum, with projections of $1.00 for Q1 2025 and $4.24 for the full year.

Jefferies analysts have upgraded Engie to a "buy" rating, citing strong financial updates and a clearer growth trajectory, particularly from 2026 onwards, with an expected return to normal utility growth and an EPS/DPS CAGR of 4-5% through 2030. They have raised their price target to €20, reflecting a 20% increase, and view Engie as a compelling defensive investment with an attractive dividend, though risks such as French politics and supply chain issues remain.

Upcoming data and events

Key economic data is due today, including the Services PMI, ISM Non-Manufacturing PMI, and Initial Jobless Claims, all of which could influence market sentiment and direction.

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