TSX runs higher on rate cut expectations
Investing.com - European equity indices retreated Wednesday as the trade war between China and the U.S. intensified, raising concerns over the strength of the global economy.
At 03:05 ET (07:05 GMT), the DAX index in Germany dropped 0.5%, the CAC 40 in France slipped 0.7% and the FTSE 100 in the U.K. fell 0.3%.
The pan-Europe Stoxx 600 index
Sino-U.S. trade war intensifies
European equities have followed the sea of red seen in Asia earlier Wednesday, as well as the negative close on Wall Street overnight, with investors fretting about the new moves by the Trump administration in the trade war with China, the two largest economies in the world.
U.S. President Donald Trump has now ordered a probe into potential new tariffs on all U.S. critical minerals imports, which are heavily skewed towards China.
Sentiment has also been hit by AI powerhouse Nvidia (NASDAQ:NVDA) disclosing late Tuesday that it anticipates up to $5.5 billion in charges in its upcoming first-quarter financial results related to U.S. chip export controls on China.
This has overshadowed relatively positive growth figures out of Beijing, with Chinese GDP growing 5.4% in the first quarter, more than the expected 5.2%.
However, this growth predates the U.S. hike in tariffs on China to a staggering 145%, and could be seen as the calm before the storm.
U.K. inflation growth slows
Back in Europe, U.K. inflation slowed in March, raising the likelihood that the Bank of England cuts interest rates once more at its next meeting in May.
The consumer price index slowed to an annual rate of 2.6% in March from 2.8% in February, below analysts expectations of a 2.7% release.
The U.K. central bank held interest rates at 4.5% in March, with the voting pattern showing 8-1 in favor of holding rates, while one member voted to cut.
The equivalent eurozone inflation is due later in the session, and is expected to show a cooling to annual growth of 2.2% in March, from 2.3% the prior month.
The European Central Bank meets on Thursday, and expectations are growing that policymakers will agree to a 25-basis-point cut, bringing the ECB’s deposit rate to 2.25%.
ASML could see demand slowdown
In the corporate sector, ASML (AS:ASML) missed on net bookings expectations, suggesting a potential slowdown in demand for its critical chipmaking machines even as the Dutch semiconductor equipment firm reaffirmed its full-year revenue and margin forecast.
Dutch brewing giant Heineken (AS:HEIN) reported a 0.9% increase in first-quarter organic net revenues, just exceeding expectations for a slight decline even as tariff uncertainty bites.
Nordea Bank (ST:NDASE) posted a stronger-than-expected first-quarter operating profit, supported by higher income and a drop in both expenses and loan losses compared to the previous quarter.
Edenred (EPA:EDEN) maintained its full-year guidance despite a softer-than-expected first quarter, as solid Mobility growth helped offset continued weakness in other segments for the financial services company.
Crude falls on demand uncertainty
Oil prices fell Wednesday, with traders fretting over the likely impact of the trade uncertainty on global growth, and thus demand for crude.
At 03:05 ET, Brent futures dropped 0.8% to $64.18 a barrel, and U.S. West Texas Intermediate crude futures slipped 0.8% to $60.82 a barrel.
The International Energy Agency on Tuesday joined the Organization of the Petroleum Exporting Countries in cutting its forecast for global oil demand this year, citing Trump’s tariffs on trading partners and their retaliatory moves.
The IEA forecast crude demand to rise by 730,000 barrels per day in 2025, sharply lower than the 1.03 million bpd expected last month, and the slowest growth rate for five years.