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The global trade war might have been reduced for now to a battle between Beijing and Washington DC.
But a bruising week for financial markets has left policymakers at the European Central Bank (the ECB), and in emerging economies, facing a very different backdrop.
Those central banks (and the BoC) must meet in days to come.
Also ahead is a raft of Mainland China macro data, U.S. consumer retail numbers, and Q1 earnings.
These provide fodder for investors, who fear the sound of recession alarm bells ringing.
Next are Reuters' five world market themes, re-ordered for equity traders:
(1) This Has Been a Chaotic, High-Speed Financial Crisis.
Trump's tariffs and subsequent reversal have whipped up volatility across markets and - although there have been bigger absolute moves in stocks, bonds and currencies in past crises - very few have been this fast.
With volatility, it's the speed of a move, not the size, that can set alarm bells off.
April's market swings have played out with similar intensity to the 2020 COVID crisis and near that of the 2008 financial crisis, but in a fraction of the time.
U.S. assets are the focus of the selling at the moment, with U.S. Treasuries, stocks and the U.S. dollar shooting higher, only to drop just as fast.
• In 2020, the acute stage of the COVID crisis for markets lasted roughly 24 trading days. • In 2008, it lasted some 78 days.
This time, it's been just ten days.
(2) The U.S. Trade War, at this Point, Seems mostly with Mainland China.
Donald Trump's campaign of global tariffs now seems very much a trade war with China.
Not only was China omitted from the 90-day reprieve on "Liberation Day" levies that POTUS gave most U.S. trading partners, he ramped them up to effectively 145% when taking earlier imposed levies into account.
Beijing has just upped its levy on U.S. shipments to 125% from 84%, and could go higher as the tit-for-tat spat ratchets higher.
But it feels academic, since current levels mean trade is pretty much dead.
A China data dump, including trade, factory production and retail sales figures, is due in days to come.
(3) On Wed., April 16th, U.S. Retail Data for March Comes Out. Netflix Reports too.
The latest test of whether economic and tariff uncertainty is weighing on U.S. consumer behavior comes with the April 16th release of the monthly U.S. retail sales data.
Despite Washington's reprieve on some tariffs, March retail sales numbers will offer a view into how much economic anxiety may be impacting consumer spending already.
February saw only a marginal rebound as consumers curbed discretionary spending while consumer confidence indicators have been battered.
Corporate earnings reports also pick up steam in the coming week, with markets expecting profit warnings ahead.
Streaming giant Netflix (NFLX) is among the companies set to report, with its results due on Thursday.
Investors are eager to see if companies are able to forecast despite the changing tariff backdrop.
(4) On Thursday, the European Central Bank (ECB) Meets.
How tariff chaos will change policymakers' thinking on rate cuts ahead will be the focus when the European Central Bank meets on Thursday.
Traders now fully price in another 25 basis-point cut bringing the bank's key rate to 2.25%, a move they had seen as a coin toss when the ECB last met. And they predict two more moves after that - a sharp increase from March.
That speaks to the threat facing the European economy, which is still hit by a broad 10% tariff during Trump's 90-day pause, not to mention higher tariffs on steel, aluminum, and cars.
From April 11th, E.U. finance ministers will meet in Warsaw to discuss the bloc's response to Trump's measures.
Italy's Prime Minister Giorgia Meloni will then meet POTUS on Thursday.
(5) Also Thursday? It is a Big Day for Emerging Market Central Bank Meetings.
The Trump tariff markets rout has shifted all sorts of tectonic plates in emerging markets.
Higher-yielding, lower-rated countries have suffered a disproportionate hit to their bonds and borrowing costs compared to higher-rated peers.
Asia - dominated by its regional behemoth China - has found itself at the center of the fallout from tariff wars.
Latin America is in a more sheltered place.
The new trade world order will pose fresh challenges to a number of policy makers, who have to navigate prospects of slowing growth, and likely rising inflation pressures.
Thursday is a big day for emerging central banks:
• Turkey is expected to hold its benchmark rate, and questions are rising on how much room. • Egypt's policy makers have room left to cut rates, against the backdrop of increased volatility. • South Korea's central bank may be forced to bring forward or deepen interest rate cuts this year, when faced with the risk of recession.
Zacks #1 Rank (STRONG BUY) Stocks
I picked two major Japanese conglomerate stocks and one U.S. financial firm this week, a futures exchange benefitting from the stock market’s volatility.
(1) Sony (SONY - Free Report) ): This is a $23 a share Japanese stock, with a market cap of $138.9B. It is found in the Consumer Discretionary -Audio/Video Production industry. I see a Zacks Value score of C, a Zacks Growth score of B, and a Zacks Momentum score of B.
Image Source: Zacks Investment Research
Headquartered in Tokyo, Japan, Sony Group designs, manufactures and sells several consumer and industrial electronic equipment.
The company’s product roster comprises audio and video equipment, televisions, network services, game hardware and software, mobile phones and image sensors. Additionally, Sony is active in the production, acquisition and distribution of recorded music and the management and licensing of the words and music for songs.
In addition, Sony operates several financial services businesses that include banking operations and life and non-life insurance operations, both of which are managed by its Japanese subsidiaries.
Sony Financial Group mainly focuses on insurance, banking and other operations primarily through Sony Life. Markedly, Sony Bank offers mortgage loans and foreign-currency deposits to consumers via online services. Also, the company has an advertising agency and a network services business in Japan.
The company currently has six major reportable segments:
• G&NS (accounting for 32.8% of total operating revenues in fiscal 2023) • Music (12.4%) • Pictures (11.5%) • Entertainment, Technology & Services (ET&S) (18.9%) • Imaging & Sensing Solutions (I&SS) (12.3%) and • Financial Services (12.1%)
(Note: Zacks identifies fiscal years by the month in which the fiscal year ends, while SONY identifies its fiscal year by the calendar year in which it begins; so comparable figures for any given fiscal year, as published by SONY, will refer to this same fiscal year as being the year before the same year, as identified by Zacks.)
(2) Hitachi (HTHIY - Free Report) ): This is a $21 a share Japanese stock, with a market cap of $96.4B. It is found in the Conglomerates – Diversified Operations industry. I see a Zacks Value score of C, a Zacks Growth score of C, and a Zacks Momentum score of A.
Image Source: Zacks Investment Research Hitachi Ltd., headquartered in Tokyo, is one of the world's leading global electronics companies.
They manufacture and market a wide range of products, including computers, semiconductors, consumer products, and power and industrial equipment.
(3) CME Group (CME - Free Report) ): This is a $258 a share Japanese stock, with a market cap of $91.6B. It is found in the Finance – Securities and Exchanges industry. I see a Zacks Value score of F, a Zacks Growth score of F, and a Zacks Momentum score of A.
Image Source: Zacks Investment Research Formed in 2007 by the merger of the Chicago Mercantile Exchange (CME - Free Report) and the Chicago Board of Trade (CBOT), CME Group is the largest futures exchange in the world in terms of trading volume as well as notional value traded.
Headquartered in Chicago, IL, it is the holding company for CME, CBOT, NYMEX, COMEX, NEX and their respective subsidiaries.
CME Group offers a broad range of products covering major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities and metals.
Trades are executed through CME Group's electronic trading platforms, open outcry and privately negotiated transactions. CME Group also operates one of the world's leading central counterparty clearing providers through CME Clearing and CME Clearing Europe, which offer clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives.
CME Group’s clearing house clears, settles and guarantees futures and options contracts traded through its exchanges. The exchanges consist of designated contract markets for the trading of futures and options contracts. The company also clears swaps contracts through a clearing house.
Thus, the majority of CME Group’s revenues are derived from clearing and transaction fees. These fees include electronic trading fees, surcharges for privately negotiated transactions and other volume-related charges for exchange-traded and cleared swaps contracts. The company's product line includes interest-rate trading, energy and equity trading contracts, foreign exchange, agricultural commodities and metal.
Notably, contract volume, and consequently revenues, tend to increase during periods of economic and geopolitical uncertainty.
Apart from trading volatility, rate structure, product mix, venue and the percentage of trades executed by customers who are members compared with non-member customers shape clearing and transaction fee revenues, which contribute the lion’s share to the top line.
Key Global Macro
Wednesday and Thursday are the big macro data and CB event days this week.
On Monday, Mainland China exports for March (prior was +2.3% y/y in USD), imports (prior was -8.4% y/y in USD) and the March trade balance (prior was +122B) come out.
The OPEC monthly oil market report comes out too.
The Fed’s influential Chris Waller speaks. The Fed’s Harker and Bostic also speak.
On Tuesday, the Euro Area ZEW survey comes out. Economic Sentiment for April is a key part of that. I see a low 39.8 as the prior reading. Welcome to the trade war, Europe!
The U.K. ILO household unemployment rate for FEB comes out. I see a prior 4.4% mark showed up, in a now-distant JAN.
On Wednesday, Mainland China offers a Q1 real GDP growth number. The prior reading was +5.4% y/y. The fresh quarter should be running at +5.1% y/y now.
Mainland China’s retail sales for MAR should be up +4.1% y/y, following a solid +4.0% y/y prior FEB number.
The Euro Area core HICP inflation rate should be stable at +2.4% y/y in MAR.
U.S. retail sales for MAR come out. FEB showed a +3.1% y/y retail sales growth.
The Bank of Canada (BoC) makes a policy rate decision. The current policy rate is 2.75%.
Chair Powell gives a speech.
On Thursday, the European Central Bank likely cuts its main refi rate to 2.4% from 2.65%.
On Friday, is a Good Friday Easter holiday, in Canada and the U.S., and elsewhere.
Conclusion
On April 9th, Zacks Research Director Sheraz Mian supplied a Q1 earnings update.
Here are the key points:
(1) The Q1 earnings season will be less about what companies earned in the first quarter of 2025 and more about sizing up the earnings impact of the emerging tariff and macroeconomic backdrop.
Pre-announcements and guidance from some of the early reporting companies suggest that most companies may be forced to withdraw, or lower their earlier guidance, given the tariff-induced uncertainty.
(2) Guidance is always the most important aspect of any earnings season.
But it will be an even more significant part of the Q1-25 reporting cycle.
(3) Total Q1-25 earnings for the S&P500 index are expected to be up +5.8% from the same period last year on +3.8% higher revenues.
This would follow the +14.1% earnings growth on +5.7% revenue growth in the preceding period.
(4) Concerning year-over-year earnings growth, 8 of the 16 Zacks sectors are expected to enjoy positive earnings growth.
The major growth drivers:
• Medical (+33.6% growth) • Utilities (+15.0%) • Transportation (+8.6%), and • Info Tech (+12.5%)
Welcome to a new trading world!
Best of luck, to all.
Warm Regards,
John Blank, PhD.
Zacks Chief Equity Strategist and Economist
See More Zacks Research for These Tickers
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Global Week Ahead: A U.S./China Trade War Sequel
What is happening, in this Global Week Ahead?
The global trade war might have been reduced for now to a battle between Beijing and Washington DC.
But a bruising week for financial markets has left policymakers at the European Central Bank (the ECB), and in emerging economies, facing a very different backdrop.
Those central banks (and the BoC) must meet in days to come.
Also ahead is a raft of Mainland China macro data, U.S. consumer retail numbers, and Q1 earnings.
These provide fodder for investors, who fear the sound of recession alarm bells ringing.
Next are Reuters' five world market themes, re-ordered for equity traders:
(1) This Has Been a Chaotic, High-Speed Financial Crisis.
Trump's tariffs and subsequent reversal have whipped up volatility across markets and - although there have been bigger absolute moves in stocks, bonds and currencies in past crises - very few have been this fast.
With volatility, it's the speed of a move, not the size, that can set alarm bells off.
April's market swings have played out with similar intensity to the 2020 COVID crisis and near that of the 2008 financial crisis, but in a fraction of the time.
U.S. assets are the focus of the selling at the moment, with U.S. Treasuries, stocks and the U.S. dollar shooting higher, only to drop just as fast.
• In 2020, the acute stage of the COVID crisis for markets lasted roughly 24 trading days.
• In 2008, it lasted some 78 days.
This time, it's been just ten days.
(2) The U.S. Trade War, at this Point, Seems mostly with Mainland China.
Donald Trump's campaign of global tariffs now seems very much a trade war with China.
Not only was China omitted from the 90-day reprieve on "Liberation Day" levies that POTUS gave most U.S. trading partners, he ramped them up to effectively 145% when taking earlier imposed levies into account.
Beijing has just upped its levy on U.S. shipments to 125% from 84%, and could go higher as the tit-for-tat spat ratchets higher.
But it feels academic, since current levels mean trade is pretty much dead.
A China data dump, including trade, factory production and retail sales figures, is due in days to come.
(3) On Wed., April 16th, U.S. Retail Data for March Comes Out. Netflix Reports too.
The latest test of whether economic and tariff uncertainty is weighing on U.S. consumer behavior comes with the April 16th release of the monthly U.S. retail sales data.
Despite Washington's reprieve on some tariffs, March retail sales numbers will offer a view into how much economic anxiety may be impacting consumer spending already.
February saw only a marginal rebound as consumers curbed discretionary spending while consumer confidence indicators have been battered.
Corporate earnings reports also pick up steam in the coming week, with markets expecting profit warnings ahead.
Streaming giant Netflix (NFLX) is among the companies set to report, with its results due on Thursday.
Investors are eager to see if companies are able to forecast despite the changing tariff backdrop.
(4) On Thursday, the European Central Bank (ECB) Meets.
How tariff chaos will change policymakers' thinking on rate cuts ahead will be the focus when the European Central Bank meets on Thursday.
Traders now fully price in another 25 basis-point cut bringing the bank's key rate to 2.25%, a move they had seen as a coin toss when the ECB last met. And they predict two more moves after that - a sharp increase from March.
That speaks to the threat facing the European economy, which is still hit by a broad 10% tariff during Trump's 90-day pause, not to mention higher tariffs on steel, aluminum, and cars.
From April 11th, E.U. finance ministers will meet in Warsaw to discuss the bloc's response to Trump's measures.
Italy's Prime Minister Giorgia Meloni will then meet POTUS on Thursday.
(5) Also Thursday? It is a Big Day for Emerging Market Central Bank Meetings.
The Trump tariff markets rout has shifted all sorts of tectonic plates in emerging markets.
Higher-yielding, lower-rated countries have suffered a disproportionate hit to their bonds and borrowing costs compared to higher-rated peers.
Asia - dominated by its regional behemoth China - has found itself at the center of the fallout from tariff wars.
Latin America is in a more sheltered place.
The new trade world order will pose fresh challenges to a number of policy makers, who have to navigate prospects of slowing growth, and likely rising inflation pressures.
Thursday is a big day for emerging central banks:
• Turkey is expected to hold its benchmark rate, and questions are rising on how much room.
• Egypt's policy makers have room left to cut rates, against the backdrop of increased volatility.
• South Korea's central bank may be forced to bring forward or deepen interest rate cuts this year, when faced with the risk of recession.
Zacks #1 Rank (STRONG BUY) Stocks
I picked two major Japanese conglomerate stocks and one U.S. financial firm this week, a futures exchange benefitting from the stock market’s volatility.
(1) Sony (SONY - Free Report) ): This is a $23 a share Japanese stock, with a market cap of $138.9B. It is found in the Consumer Discretionary -Audio/Video Production industry. I see a Zacks Value score of C, a Zacks Growth score of B, and a Zacks Momentum score of B.
Image Source: Zacks Investment Research
Headquartered in Tokyo, Japan, Sony Group designs, manufactures and sells several consumer and industrial electronic equipment.
The company’s product roster comprises audio and video equipment, televisions, network services, game hardware and software, mobile phones and image sensors. Additionally, Sony is active in the production, acquisition and distribution of recorded music and the management and licensing of the words and music for songs.
In addition, Sony operates several financial services businesses that include banking operations and life and non-life insurance operations, both of which are managed by its Japanese subsidiaries.
Sony Financial Group mainly focuses on insurance, banking and other operations primarily through Sony Life. Markedly, Sony Bank offers mortgage loans and foreign-currency deposits to consumers via online services. Also, the company has an advertising agency and a network services business in Japan.
The company currently has six major reportable segments:
• G&NS (accounting for 32.8% of total operating revenues in fiscal 2023)
• Music (12.4%)
• Pictures (11.5%)
• Entertainment, Technology & Services (ET&S) (18.9%)
• Imaging & Sensing Solutions (I&SS) (12.3%) and
• Financial Services (12.1%)
(Note: Zacks identifies fiscal years by the month in which the fiscal year ends, while SONY identifies its fiscal year by the calendar year in which it begins; so comparable figures for any given fiscal year, as published by SONY, will refer to this same fiscal year as being the year before the same year, as identified by Zacks.)
(2) Hitachi (HTHIY - Free Report) ): This is a $21 a share Japanese stock, with a market cap of $96.4B. It is found in the Conglomerates – Diversified Operations industry. I see a Zacks Value score of C, a Zacks Growth score of C, and a Zacks Momentum score of A.
Image Source: Zacks Investment Research
Hitachi Ltd., headquartered in Tokyo, is one of the world's leading global electronics companies.
They manufacture and market a wide range of products, including computers, semiconductors, consumer products, and power and industrial equipment.
(3) CME Group (CME - Free Report) ): This is a $258 a share Japanese stock, with a market cap of $91.6B. It is found in the Finance – Securities and Exchanges industry. I see a Zacks Value score of F, a Zacks Growth score of F, and a Zacks Momentum score of A.
Image Source: Zacks Investment Research
Formed in 2007 by the merger of the Chicago Mercantile Exchange (CME - Free Report) and the Chicago Board of Trade (CBOT), CME Group is the largest futures exchange in the world in terms of trading volume as well as notional value traded.
Headquartered in Chicago, IL, it is the holding company for CME, CBOT, NYMEX, COMEX, NEX and their respective subsidiaries.
CME Group offers a broad range of products covering major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities and metals.
Trades are executed through CME Group's electronic trading platforms, open outcry and privately negotiated transactions. CME Group also operates one of the world's leading central counterparty clearing providers through CME Clearing and CME Clearing Europe, which offer clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives.
CME Group’s clearing house clears, settles and guarantees futures and options contracts traded through its exchanges. The exchanges consist of designated contract markets for the trading of futures and options contracts. The company also clears swaps contracts through a clearing house.
Thus, the majority of CME Group’s revenues are derived from clearing and transaction fees. These fees include electronic trading fees, surcharges for privately negotiated transactions and other volume-related charges for exchange-traded and cleared swaps contracts. The company's product line includes interest-rate trading, energy and equity trading contracts, foreign exchange, agricultural commodities and metal.
Notably, contract volume, and consequently revenues, tend to increase during periods of economic and geopolitical uncertainty.
Apart from trading volatility, rate structure, product mix, venue and the percentage of trades executed by customers who are members compared with non-member customers shape clearing and transaction fee revenues, which contribute the lion’s share to the top line.
Key Global Macro
Wednesday and Thursday are the big macro data and CB event days this week.
On Monday, Mainland China exports for March (prior was +2.3% y/y in USD), imports (prior was -8.4% y/y in USD) and the March trade balance (prior was +122B) come out.
The OPEC monthly oil market report comes out too.
The Fed’s influential Chris Waller speaks. The Fed’s Harker and Bostic also speak.
On Tuesday, the Euro Area ZEW survey comes out. Economic Sentiment for April is a key part of that. I see a low 39.8 as the prior reading. Welcome to the trade war, Europe!
The U.K. ILO household unemployment rate for FEB comes out. I see a prior 4.4% mark showed up, in a now-distant JAN.
On Wednesday, Mainland China offers a Q1 real GDP growth number. The prior reading was +5.4% y/y. The fresh quarter should be running at +5.1% y/y now.
Mainland China’s retail sales for MAR should be up +4.1% y/y, following a solid +4.0% y/y prior FEB number.
The Euro Area core HICP inflation rate should be stable at +2.4% y/y in MAR.
U.S. retail sales for MAR come out. FEB showed a +3.1% y/y retail sales growth.
The Bank of Canada (BoC) makes a policy rate decision. The current policy rate is 2.75%.
Chair Powell gives a speech.
On Thursday, the European Central Bank likely cuts its main refi rate to 2.4% from 2.65%.
On Friday, is a Good Friday Easter holiday, in Canada and the U.S., and elsewhere.
Conclusion
On April 9th, Zacks Research Director Sheraz Mian supplied a Q1 earnings update.
Here are the key points:
(1) The Q1 earnings season will be less about what companies earned in the first quarter of 2025 and more about sizing up the earnings impact of the emerging tariff and macroeconomic backdrop.
Pre-announcements and guidance from some of the early reporting companies suggest that most companies may be forced to withdraw, or lower their earlier guidance, given the tariff-induced uncertainty.
(2) Guidance is always the most important aspect of any earnings season.
But it will be an even more significant part of the Q1-25 reporting cycle.
(3) Total Q1-25 earnings for the S&P500 index are expected to be up +5.8% from the same period last year on +3.8% higher revenues.
This would follow the +14.1% earnings growth on +5.7% revenue growth in the preceding period.
(4) Concerning year-over-year earnings growth, 8 of the 16 Zacks sectors are expected to enjoy positive earnings growth.
The major growth drivers:
• Medical (+33.6% growth)
• Utilities (+15.0%)
• Transportation (+8.6%), and
• Info Tech (+12.5%)
Welcome to a new trading world!
Best of luck, to all.
Warm Regards,
John Blank, PhD.
Zacks Chief Equity Strategist and Economist