TSX runs higher on rate cut expectations
Investing.com - Markets are gearing up for April 2, when U.S. President Donald Trump is expected to unveil a new batch of tariffs that could upend longstanding international trading relationships.
Analysts have suggested that the day is shaping up to see a steep escalation of Trump’s push to rebalance the U.S.’s trading stance, a central focus of his administration since he returned the White House for a second term earlier this year.
Trump, who has said the pronouncements will be part of what he has called "liberation day," is tipped to impose fresh duties on both friends and adversaries alike, including levies matching foreign tariff barriers.
His cabinet has said a group of at least 15 countries may be targeted, although a Wall Street Journal report said a greater number of countries was being considered. The report also said that Trump was considering a flat 20% tariff on all countries the U.S. has a trade deficit with.
Last week, Trump revealed new automotive tariffs, making good on a pledge to penalize foreign importers of cars and light trucks into the U.S. Strategists have flagged that the move could raise domestic car prices, although Trump said over the weekend that he "couldn’t care less" if foreign automakers hike costs for consumers.
Trump has argued that his tariffs are necessary to correct U.S. trade imbalances, collect revenue to offset proposed tax cuts, and help bring manufacturing back into the country.
On the economic calendar, investors will have the chance to parse through a host of data points this week, including the all-important jobs report for March.
The U.S. economy is tipped to have added 139,000 roles in March, down from 151,000 in the previous month, while the unemployment rate is seen equaling February’s mark of 4.1%.
Prior to the release of the nonfarm payrolls figures on Friday, measures of private hiring and job openings will also be published, along with separate numbers tracking manufacturing activity.
The main stock averages on Wall Street sank to end the prior week, with fears growing over the impact of Trump’s levies on growth and inflationary pressures. U.S. consumer spending also bounced by less than anticipated in February and a metric of underlying prices rose by the most in 13 months, data showed on Friday, while a survey of 12-month consumer inflation expectations spiked to the highest point in almost 2-1/2 years in March.
"The threat of tariffs is already prompting concerns about higher prices that could squeeze consumer spending power. Additionally, households are worrying about the impact of the Department of Government Efficiency’s spending cuts on jobs and entitlements," analysts at ING said in a note to clients.
What analysts are saying about U.S. stocks
J.P. Morgan: "If markets are under pressure over the next months on challenging growth-policy tradeoff, then international equities will be capped, too, but they might not need to be high beta versus the U.S. in periods of volatility, as has historically been the case."
Morgan Stanley (NYSE:MS): "[T]he reciprocal tariff announcement on April 2 should offer some incremental clarity on tariff rates and countries/products in scope, but it’s likely a stepping stone for further tariff negotiations as opposed to a clearing event. This means policy uncertainty and growth risks are likely to persist -- it’s a question of to what degree."
Citi: "[W]e consider twists related to policy and macros. 5,500 is a level [for the S&P 500] with good risk/reward as it splits our bear/base cases. Shifting sands relate to increased recession concerns offset by an improved mega-cap
growth valuation."
RBC Capital Markets: "With US equity investors hunting for clues on whether the deterioration in consumer sentiment surveys is already or soon will be reverberating in hard data, we spent some time last week reading through earnings and conference transcripts for Russell 3000 consumer-related companies that have come out since mid-March. What we read lends credibility to the idea that consumers are still spending but shifting their spend, as well as the idea that the deterioration in sentiment has resulted in some changes in behavior and a retreat in some regards."