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ASX Anticipates Gains as Trump Temporarily Eases Tariff Tensions

ASX Anticipates Gains as Trump Temporarily Eases Tariff Tensions

ASX Anticipates Gains as Trump Temporarily Eases Tariff Tensions?w=400

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Australian stocks are poised to follow a positive US market trend, with the S&P-ASX200 futures rising by 6.6% after US President Donald Trump's latest tariff adjustment.
The S&P 500 gained 9.5% after Trump announced a temporary reprieve from tariffs for various countries, aimed at addressing investor apprehensions regarding the global economic implications of aggressive US trade tactics.

In an unexpected move, the US President declared a 90-day suspension of certain new tariffs, with notable exceptions including a hike on Chinese imports to 125%. This was a direct retaliation against China's decision to impose an 84% levy on US goods set to begin on April 10. Although Trump's announcement provided some relief, market participants remain wary about future trade policy directions. Since the broad tariffs were announced earlier in the month, the market endured its steepest four-day decline in five years, dropping over 12%.

Despite lingering uncertainties surrounding tariff policies, investors took advantage of lower stock prices. BMO Private Wealth's chief market strategist, Carol Schleif, mentioned that markets have a natural tendency to rebound after intense periods, similar to a temperamental child calming down after a tantrum. The suspension provides a window for possible negotiations, though companies continue to face unpredictability.

Goldman Sachs withdrew its recession warning, reverting to a moderate economic growth prediction for 2025 following Trump's policy change. Kevin Gordon, a senior investment strategist at Charles Schwab, noted that the market's bounce from oversold levels was logical, yet cautioned against making definitive projections given the volatile policy environment.

In addition, the recent US Treasury's 10-year note auction was successful, indicating strong investor demand with yields close to market expectations, further aiding sentiment. The major US indexes reflected the optimism, with the Nasdaq gaining 12.16% and the Dow Jones up 7.82% by market close.

The forthcoming earnings season should provide further clarity on the effects of tariffs on economic growth, with big names like JPMorgan Chase set to release results soon. Meanwhile, the CBOE Volatility Index saw a significant decline in response to the tariff news, showing decreased market fear.

Further developments are awaited as the Federal Reserve's recent meeting minutes highlighted mixed economic forecasts, mentioning potential challenges of balancing inflation control with growth stimulation. Additionally, a comprehensive consumer price inflation report will be released shortly, potentially offering new insights into inflation trends.

While markets have reacted favorably to the temporary tariff measures, business leaders like Delta Air Lines are exercising caution. The airline reported better-than-expected profits for the first quarter but withdrew its financial guidance for 2025, projecting lower-than-anticipated current-quarter profits amid the uncertain economic landscape.

Published:Thursday, 10th Apr 2025
Source: Paige Estritori

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