Equities Surge on Optimism Over Tariffs
Stock markets closed higher on Monday, driven by reports suggesting that the Trump administration may adopt a more targeted set of reciprocal tariffs, potentially easing inflationary pressures and reducing trade tensions. The Nasdaq, S&P 500, and Dow Jones all posted strong gains, with consumer discretionary and technology stocks leading the market.
Tesla surged 12%, emerging as the top performer on the S&P 500, while Nvidia and Amazon gained 3.2% and 3.6%, respectively. The rally was further supported by strong U.S. private-sector output data, which showed a surprising acceleration in growth, led by increased services activity, despite a modest decline in manufacturing.
Tariff Developments and Energy Markets
Investor optimism was fueled by expectations that the proposed tariffs, set to take effect on April 2, may allow exemptions for certain countries, reducing concerns about inflation.
In the energy sector, WTI crude oil rose 1.3%, supported by OPEC’s output strategy, which signaled a tightening supply outlook. Meanwhile, the U.S. dollar strengthened against major global currencies as traders adjusted their positions ahead of further tariff developments.
Global Market Overview
Asian Markets
Most Asian markets advanced on Tuesday, supported by optimism that U.S. tariffs would be less severe than initially feared. Japan’s Nikkei 225 was among the top gainers. However, Chinese equities in Hong Kong declined as investors took profits in tech stocks, with the Hang Seng dropping 2%, led by losses in Xiaomi and Alibaba.
U.S. and European Markets
U.S. equity futures remained steady overnight as investors awaited further updates on the Trump administration’s tariff plans and potential sector-specific exemptions.
European equities closed mixed, with the Stoxx 50 and Stoxx 600 hovering near the flatline. Bayer tumbled 7% after a $2.1 billion damages ruling, while JD Sports declined nearly 5% following a downgrade. On the upside, Saab gained 6.3% after an upgrade from UBS. The travel and leisure sector also advanced, benefiting from the reopening of Heathrow Airport, though optimism over tariff flexibility faded later in the session.
Currency and Commodities Update
The U.S. dollar climbed to a three-week high against the yen and reached $1.0781 against the euro, marking its strongest level since March 6. Investors adjusted positions ahead of further tariff announcements, contributing to the greenback’s strength.
The British pound weakened to a two-week low of $1.2883 before stabilizing at $1.2918, reflecting market uncertainty surrounding the economic impact of the proposed tariffs.
Oil prices remained stable in Asian trading after rising more than 1% in the previous session, following President Trump’s threat of 25% tariffs on countries purchasing oil from Venezuela. OPEC+ confirmed plans to increase production in May, while traders monitored U.S.-brokered Russia-Ukraine peace talks for potential supply disruptions.
Equities on the Move
Several notable companies experienced significant stock price movements due to earnings results, analyst ratings, or corporate developments:
- Alibaba: Chairman Joe Tsai announced that the company will resume hiring, citing increased confidence following President Xi Jinping’s meeting with business leaders. He also warned about excessive AI infrastructure investments in the U.S. and unveiled Alibaba’s plans to invest 380 billion yuan in its cloud and AI business over the next three years.
- HSBC: The bank is evaluating outsourcing part of its fixed-income trading operations, including technology, analytics, and order execution, to firms like Citadel Securities or Jane Street Group. The move is part of CEO Georges Elhedery’s broader restructuring efforts to streamline operations and cut costs.
- Robinhood: Massachusetts’ securities regulator launched an investigation into the company’s new prediction-markets hub, citing concerns that it may link gambling with brokerage accounts, particularly among younger investors. The probe includes a subpoena for marketing materials and user data.
- BYD: The Chinese electric vehicle maker reported a 73.1% surge in Q4 net profit to 15 billion yuan, driven by lower prices and higher sales. Full-year profit rose 34% to a record 40.3 billion yuan. BYD overtook Volkswagen as China’s top car seller in 2024 and saw a 71.9% increase in overseas shipments, with plans to build a new manufacturing plant in Germany.
- Boeing: The company is attempting to withdraw a previous agreement to plead guilty to criminal charges related to misleading regulators before two fatal 737 MAX crashes. Following a U.S. judge’s rejection of the initial plea deal in December, Boeing is now negotiating a new agreement with the Justice Department amid regulatory pressure and scrutiny from the Trump administration.
- Bayer: Shares dropped 7% after a Georgia jury ordered the company to pay $2.1 billion in damages in a lawsuit claiming that its Roundup weedkiller caused cancer. The company has now set aside $16 billion for settlements, as it continues to face over 177,000 similar lawsuits.
- eToro: The online trading platform has filed for an IPO on the Nasdaq under the ticker “ETOR.” While details on the number of shares and pricing remain undisclosed, eToro reported strong financial growth in 2024, with revenue soaring to $12.64 billion and net income reaching $192.4 million.
- RWE: Activist investor Elliott Investment Management has urged German energy company RWE to improve shareholder returns, expressing disappointment over the company’s lack of a clear commitment to this goal. Elliott sees RWE’s reduced capital expenditure and its undervaluation as opportunities to accelerate and expand its share buyback program.
- SAP: The German software giant surpassed Novo Nordisk to become Europe’s most valuable company, reaching a market cap of $340 billion. SAP’s gains were fueled by optimism surrounding its cloud business and the potential of generative AI.
Analyst Ratings & Stock Movements
- Tesla: Piper Sandler maintained an Overweight rating with a $450 price target, attributing recent delivery declines to supply constraints while expecting future growth from innovations like robo-taxis.
- Pinterest: Guggenheim upgraded the stock to Buy and raised its price target to $40, citing strong user engagement, improved monetization, and AI-driven advertising growth.
- IBM: Wedbush Research added the company to its Best Ideas List, highlighting its focus on AI and hybrid cloud solutions. The firm expects IBM’s AI-related business to surpass $5 billion in revenue, driving strong free cash flow growth.
- Super Micro Computer (SMCI): Goldman Sachs downgraded the stock to Sell, citing intensifying competition in AI server markets, margin pressure, and valuation concerns.
- Lockheed Martin & Boeing: Lockheed Martin was downgraded due to its loss in the U.S. Air Force’s Next Generation Air Dominance (NGAD) program, as well as concerns over its export prospects. Conversely, Boeing was upgraded, with analysts citing its NGAD victory, strong production pipeline, and expectations of significant defense contracts.
- FedEx: Jefferies upgraded the stock to Buy, raising its price target to $275, citing cost-saving initiatives such as Network 2.0 and the Tri-Color Initiative, which are expected to improve operational efficiency and drive earnings growth.
- Thales & Saab: UBS Global Research upgraded both defense stocks to Buy, highlighting increased European military spending and the benefits of Sweden’s NATO accession.
Upcoming Market Events
Key U.S. economic data releases today include:
- Building permits
- New home sales
- Consumer confidence
Additionally, GameStop and JBS will report earnings, offering insights into the retail and food sectors.
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